Marketing Audit of Emirates Airlines

Executive Summary

Emirates Airlines is one of the world's largest airlines. It is a worthy competitor to such giants of European aviation as Air France-KLM, British Airways, and Lufthansa. The company provides numerous in-flight and ground services bringing unique value to its customers. It is mostly oriented at the upper-middle and middle class, while at the same time paying attention to the ordinary travelers due to its extensive development and production costs.

The company has many advantages, as wells as the disadvantages. Thus, the paper explores the environment of the company, makes competitor analysis, studies the way the market research is conducted, makes customer analysis, studies segmentation, positioning, product, pricing, distribution, and promotion strategies, as well as analyses customer service activities and makes conclusions and recommendations.

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Emirates Airlines

Emirates Airlines is one of the largest airlines in the Middle East. It was established in 1985 by the top management of Dubai for the development of tourism and infrastructure of the UAE. The company is owned by the Emirates Group. It is the largest airline on international routes in the world. More to say, it is the third-largest airline in freight vessels in the world with the largest and youngest fleet of wide-body aircraft.

Moreover, it is one of the most stable among the fastest growing airlines in the world. At the same time, Emirates is able to keep strong customer loyalty while establishing high prices. This unique company can grow and develop quickly in a strongly competitive environment by successfully using marketing strategies and tools. Thus, it is important to make the marketing audit of Emirates in order to understand the peculiarities of its marketing process better, learn what should or should not be done in the marketing in order for the company’s success and prosperity.

Environmental Context Analysis of the UAE (PESTLE)

Demographic Environment

The demographic environment of the UAE is quite complicated because it is very different. Only less than 20% of residents are the UAE citizens; the majority of the population is made up of immigrants from South Asia, Iran, and other Arab countries (CIA, 2016). The majority of the population is between 24-54 years old, most of whom are males living in urban areas (CIA, 2016). There is a high population growth rate (the 23rd place in the world), high expectancy at birth (men live near 75 years and women – near 80), and there is a very low death rate (one of the lowest in the world). However, as of July 2016, the population of the UAE comprises almost six million people, though, in 2015, it was more than nine million (CIA, 2016). Thus, such a drop in the population can negatively influence the number of Emirates Airlines customers.

Economic Environment

The economic environment of the country is always a significant factor influencing its standings, and the UAE stands very high in this regard. It is a very dynamically developing country with an exceptionally high GDP per capita that allows the UAE to take 12th place in the world and have a high real growth rate (CIA, 2016). The economy rests on oil and gas. Furthermore, the UAE has one of the lowest unemployment rates in the world accounting for 2.4% or being in 15th place in the world (CIA, 2016). Moreover, the inflation rate is low, giving the UAE the 163rd place among other countries (CIA, 2016).

Finally, the country has one of the highest stocks of direct foreign investment in the region. However, there is an economic downturn in the world, as compared to previous years, and the UAE is not an exception. Thus, the economic environment of the UAE can influence Emirates Airlines very positively, if one does not draw comparisons with previous years.

Socio-cultural Environment

The social-cultural environment of the United Arab Emirates is very diverse. There exists a mix of many different cultures due to the high rate of immigrants, as it was previously told. As a result, there are many languages in the country such as Arabic, Persian, English, Hindi, and Urdu (CIA, 2016). In the UAE, religion, mostly Islam, is very important and it greatly affects society. For example, women have to wear specific clothing. Religion also plays a significant role in business. In the UAE, there live also Christians, Hindus, and people belonging to other religions. Finally, the UAE citizens live comfortable lifestyles due to their well-paid jobs (CIA, 2016). Thus, increasing the middle class may upgrade safety demand for Emiratis Airlines.

Political and Legal Environment

The standings of the UAE are also affected by the political and legal environment. Thus, each of the seven Emirates has its own governmental institution contributing to the flexible management within the country. The country has also close relations with many countries around the world, which contributes to the easier establishment of flights between new locations. However, it has political conflicts with the neighboring countries, the main cause of which are oil reserves and land. Finally, the court proceedings in the UAE are timely, and there are no juries.

Technological Environment

Nowadays, there is a strong technological development in the world with fast-changing technology. The wealth of the UAE provides the ability to purchase the necessary equipment and to be at the forefront of technological development. At the same time, the middle-aged population of the country is very technically savvy, which gives the ability for the UAE companies to use new technologies. Therefore, the use of technology in the airfreight industry can boost the company behind or ahead of its competition.

Natural Environment

The natural environment of the UAE is unfavorable. The tropical climate is very hot and dry, and the area has sandy deserts. It can result in lower productivity of the population and more complicated farming. However, in such conditions, air conditioners are sold well, and they are widely used in the company’s aircraft. At the same time, the UAE’s location near the coastal area allows the country to trade easier by the sea.

Competitor Analysis

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Direct and Indirect Competitors

There are numerous direct competitors of Emirates Airlines such as Gulf Air Company GSC, Air France, Lufthansa AG, British Airways, and others. However, the most direct competitor and the major threat of the company is the Qatar Airways Group. On a network scale, both companies are almost of the same size. Emirates Airlines serves 128 destinations, and Qatar Airways – 124, as shown in (CAPA, 2014). The former serves more destinations in Europe than the later that operates more extensively in Asia-Pacific.

At the same time, in the premium class, Emirates’ biggest direct competitor is Lufthansa that has better safety, and that provides the same services as Emirates Airlines. The indirect competitors of the company are countless local airlines in different countries that are associated with its competitors (Davahran & Yazdanifard, 2014). However, it is hard to compete with Emirates Airlines; it has significantly more aircraft in service, transports significantly more passengers, and has a higher growth in capacity.

Analysis of Competitive Strategy and Position

Strategic capabilities are skills and abilities that the company could use, and they help the company easily survive in the competitive market. They consist of resources and competences. Thus, Emirates Airlines is embedded with threshold resources that comprise of various office equipment, flights, headquarters, employees, and its financial resources. Emirates Airlines has some main resources operating in the form of the management team.

Moreover, the company is able to provide the best premium services, including online booking procedures, operations related to the on-time delivery, and point-to-point based routing. The core competences consist of IT development and management as well as route and ability to serve premium class. Therefore, the company positions itself as the finest in the sky at a premium platform.

Competitive Advantage

Emirates Airlines provides high quality and fully equipped services in order to gain benefits and potential outcomes among its competitors and, at the same time, to get a good and remarkable place on the market to be called the Leader Company. For this specific purpose, Emirates Airlines was termed as one of the first airlines in the world to offer a big TV screen in its all aircraft. It also introduced an e-ticketing system in UAE for the very first time.

With the help of market segmentation, this company gained another major competitive advantage. Thus, it is the only company operating in the UAE that provides its pilots with the training at plane simulators (Davahran & Yazdanifard, 2014). The aim of these changes is to make this company a leader.

Finally, the company and its employees do not pay taxes, and this allows making higher revenues (Peng, 2014). At the same time, the company focuses on premium and business class passengers, so the difference between the cost price and the ticket price is high, thus contributing to even higher revenues.

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Market Research

In the Emirate Group, market research is conducted by the Market Research unit that provides the company with internal research opportunities. The unit provides consultations such as research expertise in assisting in the development of research plans for Emirates Airlines, in appraising research projects, in controlling and managing research projects domestically as well as through external research agencies (Emirate Group Careers, n.d.). The unit’s objective is to explore and study customers’ and other stakeholders’ opinions, views, and attitudes, based on which the management could make deliberate decisions.

When conducting marketing research, Emirates Airlines has to find out how the customers come out with their decisions to buy a ticket for a flight and what is more important for them when choosing a flight (time, price, or services). At the same time, it has to learn the purposes of air traveling, know to what destination the customers' book flights most frequently, how often they use airline services, and which ones, the most frequent age of customers, etc. This will help the company to study who, when, why, and how buys tickets for Emirates’ flights and those of competitors. Thus, the company will be able to find free market niches, choose the most attractive target markets, understand its consumer better, make a sales forecast, estimate the market volume, or choose the promotion strategy correctly.

The most effective way to conduct this market research is to make a written survey using a questionnaire. Participants receive questionnaires to fill and send to the destination. The more people are asked, the more accurate and representative results will be received. This method will help to get an exact figure on the specific question. Furthermore, the company can ask its consumers opinion via message boards, social networks, via e-mails, or Skype. It will lower costs for investigation. Moreover, it can study the existing information on topics of interest, including the information on the related markets on the Internet. Additionally, the company can conduct the questioning of employees and keep statistics. The combination of all these methods will contribute to the most accurate result.

Customer Analysis

Needs Analysis

Usually, when using the services and buying the tickets of Emirates Airlines, consumers seek to fulfill their emotional and social needs. In the first case, consumers purchase products and services based on feelings. Emirates Airlines has been on the market for more than 30 years, and during that time, it has built strong brand loyalty. Therefore, consumers buy tickets because of their loyal feelings to the company. In the second case, consumers prefer to satisfy their social needs. Thus, Emirates is focused on the premium class passengers and it is one of the leaders in this segment. Consequently, consumers use the airlines’ services to prove their social status and maintain it.

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Decision-Making Process Analysis (Sheth and Howard’s Model)

Customers go through a number of cognitive and behavioral processes while making their purchases and spending decisions. The awareness of how customers make a decision on one brand as a substitute of another and what factors influence their decision-making is quite crucial for marketers since they allow knowing the existing needs of their consumers but they can also prepare for their future needs. This information is also vital to make a variety of business decisions associated with product development, packaging, pricing, distribution, promotions, communication, etc.

According to Sheth and Howard’s Model of the consumer decision-making process, there are three levels or stages of consumers’ knowledge that define their decision-making (Managementduniya, 2013).

  1. At the first stage, the consumer knowledge about the product or brand is very limited or absent; the consumer does not have separate product brand preferences, and he or she actively looks for information related to alternative brands of products (Managementduniya, 2013).
  2. In the second stage, consumer’s knowledge and brand preferences are partially defined; a consumer cannot fully see the difference between the separate trademarks, by which preferences are set, and they seek more information that could establish criteria for decision-making (Managementduniya, 2013).
  3. In the third stage, a consumer is well acquainted with the knowledge and he/she has brand preferences as well as available choices on the market; therefore, a consumer is confident in buying products of a particular brand (Managementduniya, 2013).

The decision-making process is significant, although not directly, influenced by the external variables, including the value of purchase, personal factors, and the financial status of the customer as well as the influence of time.

Segmentation and Targeting

Market segmentation and targeting are one of the main elements of a company’s market strategy. The basis of the segmentation is such a position of the company in a competitive environment when it cannot meet all the needs in a particular product and therefore, it should focus only on those segments that are most preferred in terms of industrial and commercial opportunities of the company. It helps to satisfy the needs and requirements of customers fully, and as a result, it contributes to the successful operation of the company and its prosperity.

On the airlines market, the segmentation is done based on such criteria as the type of traveler, whether it is a business or leisure traveler or a traveler on a religious tour; as value, whether consumer value convenient flights or price more; as the primary requirements, as age, sex, and social status of the consumer, and others. In general, on the market, there are business segments sponsored by a specific company, leisure segments, which are self-sponsored, other segments sponsored by a company or organization, including government employees, refugees, teachers or military, and other self-sponsored segments, including students, immigrants, visiting friends, and religious travelers.

The target markets of Emirates Airlines are corporates or people with high purchasing power and social status, being of the upper-middle class or middle class. The segmentation is done based on income and occupation, including the passengers who prefer comfort and reliability. Thus, the upper-middle and middle class have the right amount of money and they are likely to prefer to pay for the Emirates’ services. Further, they are focused on the services and benefits that could be emitted from the flight experience. The segmentation based on the occupation divides the audience into business and working classes. It allows studying what percentage of the target audience fills a particular section of the plane.

Thus, the business class section is advertised using different types of communication to the people of business class, and the regular seats – to the working class. In the first case, where the price is high and not elastic, communication is based on the prestige, commitment, and efficiency offered by the company. In the second case, the communication is based on the inspiration of consumers to choose Emirates among other cheaper airlines and pay for an expensive leisure trip, emphasizing the diversity of the services that make the experience unique.

Positioning Strategy

  1. First, Emirates Airlines positions itself as a premium airline. Thus, it is more oriented at the premium class passengers, and it establishes prices and the quality services in accordance with it. For instance, in order to ensure the feeling of premium traveling, the company has created the terminal in Dubai Airport with exclusively VIP services offered to the clients before boarding the aircraft. It allows the company to justify its premium prices as compared to the rivals Qatar Airlines and Etihad Airways. As a result, due to promotion strategies, Emirates observes the growth of approximately 15-20% in the premium class passengers (The Financial Express, 2003).
  2. Secondly, Emirates positions itself as a global carrier, offering intercontinental flights with a juncture through its hub in Dubai Airport. The Emirates Flight map is available on the company website, and it constantly expands with new destinations. The company also represents its customers as globalists. Moreover, it has launched a global multimedia campaign entitled ‘Hello Tomorrow’ (O’Reilly, 2012). It is directed at positioning the company as the one that makes the global connectivity and significant experiences possible.
  3. Thirdly, the company position itself as the provider of skyward service. The skyward program is an award-winning program that could change the way people perceive the world forever, and the program is free of charge. According to it, customers earn free miles that could be spent with Emirates or its partners. Such a program increases travel and flight experience, making customers more acquainted with the company services and increasing brand loyalty.
  4. Finally, Emirates Airlines position itself as a lifestyle brand and plans to expand this practice in the future. Thus, the company does not only offer transportation from place to place, but it also gives an important experience and connection of hopes and dreams of consumers. However, Emirates has not significantly developed social networks and mobile applications in comparison to the competitors, thus staying behind in terms of being a lifestyle brand. At the same time, although the company has a mobile version of its website, there are no special applications for smartphones (Wilfing, 2012). Here is where the company also loses in contrast to its competitors.

Product Strategy

Emirates Airlines cares about its customers and tries to provide them with the best products and services. When discussing the product strategy of the company, one can highlight such features as fleet and schedule related product features as well as customer service related product features. In terms of the first features, the company provides customers with the fleet of various aircraft, including Emirates A380, Boeing 777-300ER, Boeing 777-200LR, Boeing 777-300, Boeing 777-200, Airbus A340-500, Airbus A340-300, and Airbus A330-200 (The Emirates Group, 2015).

Moreover, it provides in-flight services that differ according to the seat class. Thus, the first class is provided with the entertainment and leisure facilities, fine dining, and regionally inspired dishes as well as in-flight lounge on the board of A380. The business class is provided with the seats that could be converted into flat beds, in-seat laptop power supply, and a very long table that could be used as a workstation. There is also a controller of the private zone that can be raised and lowered and the luxury drink called “High Tea”. Furthermore, Emirates provides its passengers of all classes with the entertainment services packed in the product offering ICE (Information, Communication, and Entertainment) (The Emirates Group, 2015).

In terms of information, the passengers are enabled to keep up with the latest news on BBC as well as to follow the flight using external cameras of the plane. They are also provided with the Emirates in-flight magazine called Open Skies (The Emirates Group, 2015). In terms of communication, the passengers are enabled to keep in touch with their friends, families, or partners regardless of their location, using a phone, SMS, or mail from every seat. Regarding entertainment, the passengers are provided with music, the latest movies of the world, and TV shows. They can also play various games using their ICE with the touch screen.

Moreover, the company provides additional notable services. On more than 100 flights, the customers can use their own GSM mobile phones just as they do it on the ground. Further, they can connect Wi-Fi on all boards of the A380 (The Emirates Group, 2015). Moreover, Emirates provides transportation for first and business class passengers to the airport in high-class automobiles. Additionally, for parents with babies, the company provides priority boarding, changing tables, bassinets, and strollers.

Furthermore, it provides ticket booking on the Internet, thus contributing to the higher efficiency as well as the convenience of the customers, and reservations on the phone. Finally, it provides the customers with the self-check-in facilities, where they can choose the seat, print tickets and boarding passes as well as move directly to the terminal.

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Pricing Strategy

Emirates Airlines uses a pick ‘n’ mix approach to its pricing strategy. It means that there is a combination of various pricing strategies. The company’s pricing strategy is based on the strong competition in the industry, when the prices may be lower than the market prices, on the same level, or higher than the market, depending on the image of the product, the differences between the analog goods, the services provided, and customer loyalty.

First, the prevailing pricing strategy of the company is a value-added pricing tactic. It is the most recommended tactic for many companies. It involves coming up with such a price that customers wish to pay due to value-added features, thus keeping the prices high and being competitive (Ibrahim, 2015). Thus, this value helps to justify the high prices. It is focused not on increasing the profits but on raising customers’ loyalty to the products they will not find anywhere else.

Thus, Emirates Airlines operates and positions itself in the premium airline category. The company’s prices for the tickets and additional services are higher in comparison to its competitors in the premium category such as British Airways, Cathay Pacific, and Qatar Airways. Using the value-added strategy, Emirates justifies its high prices adding value with unlimited services of high quality.

Thus, as it was previously told, the company provides services that increase the travel value of customers and make the purchasing process, boarding, and flight easier and more convenient for the passengers. For instance, Emirates' position exquisitely even in the food and cuisine department. Additionally, the company uses the Peak/Off-peak Season pricing strategy. As a part of this strategy, Emirates introduces different festivals around the world, such as Christmas, Eid, and Diwali, during which the prices are boosted for the established customer base.

In addition to the mentioned pricing strategies, the company regularly establishes new services and offers on its price. The pricing of the company, as well as of other competitors in the industry, has been significantly influenced by the growth of aviation fuel prices. However, the company has the advantage of not paying taxes, so it is easier to manage the price and invest more in the quality of services.

Distribution Strategy

It is difficult to overestimate the value of the product distribution system and strategy, which is an integral part of the marketing mix. After all, in order to ensure that the product can meet any need, it has to be delivered to the place where it can be used at the right time and in the required quantity. At the same time, all costs of the manufacturer represent a cost until the moment the product is sold to the customer. Thus, the sale of the product is the only way to return the money spent with a certain profit that will be compensation for the entrepreneurship. Therefore, taking into account the importance of the distribution strategy, Emirates Airlines uses various distribution strategies.

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There are periods of time when there are low offer rates of tickets for the flights of Emirates Airlines. It is especially the case in winters or summers. Here is where intensive based distribution is required. In this case, the tickets are offered through various channels that are also available on the Emirates website. The company experiences the advantage of this offer because it allows and assists in working under different marketing activities. It can also increase the existing demand for related services.

The exclusive distribution strategy of Emirates Airlines allows the company to distribute its tickets to different tour operators and travel agents who are in close connection with the airline business and who are known as user friendly. However, such kind of companies requires wide geographical coverage that can be provided by Emirates.

The selective distribution strategy of the company provides various offers to selective customers and operators. Here, the company uses the external distribution channels, where many companies compete based on ground principles most efficiently. In fact, currently, consumers study the information provided on these kinds of websites and make the decisions to buy on this basis (Boyd & Hollensen, 2012). Thus, it is not effective enough.

Promotion Strategy

Promotion Objectives

When creating the promotion strategy, Emirates is likely to follow such objectives as attracting new customers to the brand, reinforcing the brand image and personality, increasing sales by raising awareness of a particular product or service, reminding consumers of existing products or services and their benefits as well as reinforcing the unique selling proposition over competitors.

Message and Creative Strategy

The slogan ‘Hello Tomorrow’ is the main message and a major factor of the communications in Emirates Airlines, with being the key element of the company’s promotional strategy for four years (O’Reilly, 2012). This message inspires customers by making them feel the company’s motivation to welcome new challenges and make advances in reaching the top. Behind this messaging, the creative strategy has become a generic campaign that combines inside all promotional messaging. The example can be the announcement of newly launched destinations of the company. Thus, when the new flights to Oslo were established, the message was ‘Hello Oslo’ (O’Reilly, 2012). Therefore, it maintains continuity in the minds of consumers.

Promotion Mix

Emirates Airlines uses a differentiated promotion mix that consists of public relations, trade and sales promotions, in-store displays, strong sponsorships, and advertisements. Thus, in addition to other advertisements, it strongly utilizes in-flight advertising, including TV advertising, as a part of inflight entertainment and an in-flight magazine. As a part of public relations, Emirates issues a public affairs journal and supports programs of the International Air Transport Association. Moreover, the company is committed to sponsorship around the world. It sponsors arts and culture as well as sports and races. Emirates also uses the combination of push and pull strategy because it pushes new products and services and pulls customers towards these products and services through advertising.

Customer Service and Relationship Activities

Being an influential company in the UAE as well as in the aviation industry, Emirates offers its Skywards club that has become one of the most bonding examples between a business and its customers. The loyalty program allows frequent Emirates’ flyers to benefit by collecting points through a wide range of purchases, allowing them to redeem benefits such as free tickets, upgrades, and other services. The exclusivity has built a relationship and a sense of brand loyalty between the customers and the company, showing the added value to the services offered by Emirates that goes beyond flying experience.

Even internally, Emirates’ ‘face card’ for cabin crew as well as employee IDs provides a long list of discounts and added benefits that the employees could enjoy throughout the UAE. This offers a service and relationship value that promotes the retention of employees and internal satisfaction and motivation to benefit the company as a whole.

Conclusion

In conclusion, Emirates Airlines is a significantly developed and successful airline company that provides transportation by the aircraft. It maintains stable growth even in the unfavorable world economic, demographic, and natural environment conditions. The company aims to consolidate its market position strongly and overtake the existing competitors that encourage the company to grow and provide better services. Emirates sells tickets at a price higher than the market one because it is oriented at the premium class consumers while providing the best services and reliable security.

However, the company has also established a relatively fair price for ordinary customers while providing services of the same quality. During many years, Emirates constantly improves and gains increasingly more trust, which makes it one of the most famous companies in the world. From the day it was established, only several planes faced serious problems, making the company more reliable and trustworthy.

Recommendations

Recommendation 1

Emirates should pay more attention to the attitudes of the employees to the customers. Even though the number of services and their uniqueness may be favorable, the support staff can be rude sometimes, which spoils the impression made by the company.

Recommendation 2

It should not allow the customers who came first on the board to sit at the seats booked by other customers who are late, which is a frequent practice.

Recommendation 3

It should allow people to enter the class of their family members if they are separated in different classes. In fact, it is a good practice to have different lounges for first, business, and economy classes, which means not allowing people to enter their private zones. However, it is not the case of family members since they should not be separated from each other.

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