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Marketing Plan | Aviation

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Marketing Plan Aviation Essay

Introduction

The aviation industry is affected by numerous factors, which determine whether an airline can establish a new route or should cease its operations in another (Belobaba, Odoni & Barnhart 2016). Since Africa has been rapidly developing in the recent past, international airlines consider it attractive for launching new routes into the continent (Mills 2016). However, this process is associated with few challenges that are caused by instabilities in some countries of the region. Consequently, they made some airlines halt operations in given routes (Mathew 2007). Establishing a new route into a given destination requires proper analysis of the area, as well as the development of a detailed business plan (Cavusgil, Knight, & Riesenberger 2016). The plan has to cover all the aspects of the business and route, including the business environment, objectives of the business, and marketing strategies among other issues. To understand different concepts related to the establishment of a new route, this paper focuses on a scenario of Emirates Airlines planning to establish a new route from Lagos, Nigeria to Dubai, UAE. In recent years, the business interaction between the UAE and Nigeria has increased and intensified. Additionally, the technological developments of Dubai are unique tourist attractions that fascinate people from far away. Therefore, it is profitable to develop a route between Lagos and Dubai. To achieve this goal, this paper focuses on the development of a business plan, which will be useful for the airline to succeed in the development of the new route. Nigeria continues to be one of the fast-developing countries in Africa; even though there are economic and political challenges, as well as, terror threats in the region, it offers Emirates Airline an opportunity to make profits by establishing a route between Lagos and Dubai.

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Situation Analysis

PESTEL Analysis Political Factors

For almost a decade, Nigeria has operated under civilian governments; the country utilized a multi-party system (George, Shadare & Owoyemi 2012). However, although there are numerous players in the political arena, there are only two dominating parties with one forming the opposition to another. The parliament has an upper and a lower house. The country has also experienced a peaceful government transition with the last election being held in 2015, which saw the two main political parties exchange power. The political environment in the country is considerably stable except for some terrorist activities in the northern part of the country. These terrorist groups strive to have control over the area and transform it into a part of the Islamic State (Cavusgil, Knight & Riesenberger 2015). In addition, some violence keeps erupting in the south part of the country resulting from the oil revenue rights, which many people want to have. In the airline industry, notable policy interventions, as well as innovations, have been witnessed; they include the development of institutional frameworks, liberalizing, deregulating, globalization, and recapitalizing (Brownlie 2014; Taneja 2017). As a result of deregulating the industry, the service delivery was improved. Additionally, restructuring institutions within the industry and government agencies allowed increasing efficiency in the operations (Olakanmi 2014). After the recapitalization policy was passed by the government, the players in the industry managed to consolidate their investments. Ultimately, this situation created the way for mergers and acquisitions. Cases of corruption in the country are considerably numerous. In 2016, the country was ranked 136th on the list of the least corrupt nation out of 176 countries with a score of 28 (EY, 2017). However, the government is implementing strategies to curb the high corruption levels. including seeking the intervention of the international community to have offshore deposits of looted funds repatriated.

Economic Factors

The buoyancy has been low in the Nigerian economy in the recent past. The nation has been largely a mono-economy with a massive reliance on oil revenues, which are under constant pressure from the world oil market (Iarossi, Mousley & Radwan 2009). As the country operates a federal government system, the revenue has to be shared at different government levels. This situation leaves the federal government with revenue insufficient for catering for its ballooning expenditure (Desai 1998). Reduced revenue and overreliance on a single source of revenue limit the citizenry’s disposable income. Consequently, for the majority of the population, luxury items are not affordable. There is also a considerably high level of unemployment in the country with 21 percent of the youth falling under this category. As a result, there are areas with high levels of crime. The positive side is that cheap labor is readily accessible. The borrowing cost in Nigeria is also considerably high, but the central bank has implemented measures to curb this problem by capping the rate at 12 percent (Uhuegho, Olaniyi & Nwokocha 2014). However, even with this initiative, all borrowing-related costs are factored in; thus, the cost escalates to approximately 15 percent.

When measured against other major currencies in the world, the foreign exchange rate for the naira is high with the rate currently standing at N358.5 to USD 1. Additionally, foreign exchange is unavailable to individuals who intend to conduct their business in foreign currencies. As a result, a parallel market is their only option (Opute & Koch 2011). Additionally, with massive fluctuations in the currency, for businesses that have foreign currency funding, the foreign exposure is significantly high. As a result of the high exchange rate, the country has been experiencing a considerable increase in the price of consumer goods. Ultimately, this situation contributed to the increase in inflation. The aviation industry in Nigeria is not a major contributor to the country’s GDP with its contribution being less than 1 percent (Emmanuel 2015).

Social and Cultural Factors

Nigeria is the most populous nation in Africa with an estimated 178 million people as of 2015, and this figure put it 7th globally. As a result of the high population, the country possesses huge potential for conducting business. Regardless of the past instabilities, the country still attracts foreign direct investment. The high population in the country can be seen as a factor contributing to the increased focus on the country by foreign investors. The country is highly diverse in terms of ethnicities and religion; this fact necessitates an understanding of the religion and cultural values of both the locals and investors. Religion is very crucial to Nigerian society; thus, it is a very sensitive issue. The major religions in the country are Islam and Christianity, with the northern part of the country being predominantly Islamic, and the south being majorly Christian. Nigerians have a high interest in fashion, and even despite low-income levels, most people follow any fashion changes. Even with the deregulation in recent years, the aviation industry still experiences challenges. Therefore, it is crucial to build confidence in air travel and deal with other minor issues, including the frequent loss of luggage and the effective provision of accurate information to travelers. There are also some security issues, which affect the industry.

Technological Factors

The country is at the forefront in terms of technological advancements. The new generation of Nigerians is tech-savvy with most youths being computer literate. Although access to computers and tablets remains low for the majority of the population, the increased use of smartphones in the country is seen to bridge this gap. The presence of Nigerians on the Internet is increasing, which provides more marketing avenues for businesses operating in the nation or targeting the country as a market of choice. The Internet penetration in the country is about 46 percent. The aviation industry is associated with high technological issues (Ferreri 2003). In the aviation industry, the country is still slightly behind in terms of technological adoptions, and it is so mainly due to the massive investments, which are needed for the adoption of some modern technologies and their implementation in the airports (Olaniyi 2015). However, the population is still not aware of new technology, which provides new businesses with an opportunity to implement hi-tech ideas in the country. Therefore, an investor in the sector can focus on this area to build a competitive advantage over competitors.

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Environmental Factors

The federal government in Nigeria has a responsibility to ensure that the ecology of the nation is protected. Additionally, the state and local governments have also established mechanisms, which promote the protection of the environment in their localities (Leal Filho 2011). However, as a result of the poor power grid, most industries have to rely heavily on power generators, which cause noise pollution. As one of the industries that have a high reliance on power is the aviation industry of Nigeria; thus, it has to follow regulations set for preventing noise pollution. In addition, any business operating in the country has to meet set regulations about safeguarding the environment from damage.

Legal Factors

The law and regulations play a vital role in the operations of an airline company (Abeyratne 2016). The legal minimum wage in Nigeria is set at 18,000 nairas, but it is not followed by the letter by some institutions and government agencies. The country’s tax system is progressive; it means that the higher the income of a person, the higher the tax amount that they pay. The average rate of personal tax is 24 percent. However, the corporate tax rate is 30 percent, and there is a value-added tax rate of 5 percent. As the country has experienced tax leakages in the past, it increased the focus on approaches that can ensure that these loopholes are blocked by the government. Consequently, the period of tax avoidance may soon turn into a relic of the old days. Any organization that needs to work business here should be ready to agree to pertinent duty laws. In addition, such an organization might be inquired about the origin of its active assets. The Nigerian Federal Inland Revenue Service now works effectively and makes tax avoidance practically impossible. Before any organization can open a financial balance in Nigeria, it is very likely to be inspected by the Federal Inland Revenue Service. Upon enlistment, Federal Inland Revenue Service will provide the organization with a Tax Identification Number. Any organization that needs to get a bank account is required to give the bank the Tax Identification Number.

Nigerian Aviation Industry SWOT Analysis

Strengths

The industry is vibrant, and this trend is expected to continue in the future. There is a steady increase in the movement of both aircraft and passengers (Babalola & Rashidat 2013). Although the domestic passenger traffic is expected to remain dominant over the international travel, the last is expected to continue increasing. Additionally, cargo transport is also strong; it is another growth area in the country (Babalola & Rashidat 2013). The trade volumes between Nigeria and other parts of the world, including Asia and the Middle East, have been steady; this trend allows the industry to boast of its strength of stability. The economy is still attracting foreign direct investment, which is critical in the further development of the economy.

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Weaknesses

The country lacks a national airline, which could compete and get into alliances with international airlines and other market players. In the past, the government used to ignore the transport sector; however, this trend is expected to change shortly (Babalola & Rashidat 2013). Poor management of the sector and the lack of maintenance facilities hinder the expansion of the sector and make it unappealing to international players. Additionally, the poor financial discipline of the Nigerian companies leads to the poor financial performance of the industry players in general.

Opportunities

The industry continues to expand and offers new opportunities for leisure and business. In addition, the cargo sector also continues to expand; this trend also creates room for expansion in the area (Babalola & Rashidat 2013). As technology continues to develop, there are opportunities to save costs and increase revenue as the mode of transport becomes cheaper and more attractive to customers.

Threats

However, some threats emanate from the general global economic downturn, which has ripple effects all over the world. In Nigeria, Boko Haram continues to be a considerable threat, which requires the route to consider security threats (Babalola & Rashidat 2013). In addition, changing government policies adds to the instability in the industry as new policies could impact the sector.

Marketing Strategy and Objectives

Objectives

The objectives of the airline in the new route:

  1. Developing a route that will link the Middle East (the UAE) and Nigeria, and create opportunities for connecting the region with the rest of the world.
  2. Provision of services and absorbing the existing demand in the under-served route and peak traffic demand.
  3. Implementing marketing and institutional strategies that will assist in the achievement of 65 to 85 percent client load with the view to maximizing revenue.
  4. Exploring and developing strategic alliances in the route to get the controlling market share.

Segmentation

It will be necessary to conduct the market segmentation before making entry into the industry. In the case of the Dubai–Lagos route, there major segments of customers include individuals traveling for business, for leisure, and cargo transportation. In addition, corporate, government, and individual customers are supposed to use the route. Business clients, mainly corporates, have the highest percentage in the route; thus, they should be the focus of the airline.

Targeting

The airline will mainly target clients traveling for business purposes and leisure, and it will offer them special packages that will increase traffic in its route (Fagbola 2015). Additionally, the government and corporate sections of the market are important, and the airline will focus its attention on this area, as well. Using its global knowledge of the industry, it will develop tailor-made strategies aimed at winning this market.

Positioning

The industry positioning of a business has a positive correlation with its competitive advantage. Therefore, the airline will focus on being attractive to customers by ensuring that they can make a booking at least three months in advance, which will also offer them travel at relatively cheap rates. Additionally, at the entry strategy, the airline will offer $100 discounts on its prices as compared to other players in the industry. The financial muscle will allow implementing this strategy and attracting people, while high-quality services will retain customers.

Marketing Programs

Marketing Strategies and Mix

The marketing mix of the company will involve intensive programs founded on the 7Ps and aimed at achieving the objectives of the company. The 7Ps play a critical role in the marketing strategies of any business (Cravens & Piercy 2013; Kotler & Keller 2006).

Product

The product offered by the company is transportation by air between Lagos and Dubai. To ensure the comfort of the offered service, the airline will ensure that there are seamless activities including the ease of checking in, on-board food variety, complimentary gifts, on-board entertainment, and frequent flier programs (Williams 2010). Additionally, it will offer additional services, including the availability of online booking, mobile ticketing, as well as pick-up and drop services for customers.

Price

The fares charged will depend on the travel class, load, booking dates, travel date, and prices of competitors. Since Emirates Airlines is a dominant international airline, it will harness its financial abilities to ensure that it offers prices, which are at least $100-200 dollars below the competition. Additionally, it will offer onboard services free of charge.

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Place

Since the airline is a successful international player, its brand is well-recognized; this fact is an additional advantage. Customers will be able to book tickets via a variety of channels, including online platforms. Clients will also be able to use the company’s offices throughout the world. In other words, they will be able to make bookings for the route from almost any part of the globe.

Promotions

The airline will make use of all the available product promotion avenues relevant to the airline industry. Considering the massive Internet penetration in the country, the possibility of online marketing via web ads and social media will be explored. Additionally, it will use brand ambassadors, billboards, advertisements, as well as media and press releases. The option of personal selling through travel agencies and different offers will also be utilized.

People

As in other parts of the world where Emirates Airlines operates, it will continue to value people as they are the most important P. They will offer training and motivation to their employees to boost productivity and loyalty. The frontline staff will have appropriate training to know how to work with customers. Cultural understanding of the Nigerian people will be useful for employees to offer high-quality service. These employees should also possess empathy.

Process

The process of the airline will focus majorly on the interconnectedness of employees, travel agencies, and customers. The process should start at the time of making a reservation. There should also be a concession on the side of the airline not to apply charges for cancellations. The quality of services during the flight is also critical to the process and promotes client satisfaction and retention.

Physical Evidence

It is the physical location where the interaction between a customer and the service industry occurs. The aircraft and the waiting areas play a critical role. The company will provide reliable aircraft for the route, including Airbuses and Boeings, which are perfect for commercial services and comfortable for passengers.

Control and Evaluation

This section focuses on getting metrics that will indicate the progress of the implementation of the strategy (Shaw 2011). To ensure that the plan is effective, there will be a measurement of the target market sales. In the beginning, the company will set sales targets for its flights. These targets will need to be met for the plan to be effective. It will be done through the analysis of the competition performance, and the company expects to have a 5 percent market share by the end of the first two years. Another metric to be used in the control and evaluation is customer feedback, which will avail qualitative information about services offered by the company. Frequent surveys and questionnaires, as well as feedback avenues, will be provided. Information received will be used for the improvement of services.

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Recommendations and Conclusions

The analysis of the Nigerian market for a route between Dubai and Lagos shows that there is potential for Emirates Airline in the region. Consequently, it can perform effectively in the industry, which is mainly controlled by local airlines. The economy of Nigeria is growing, and there is additional demand for flights between the country and the Middle East for business and leisure. The company should rely on its global understanding of the aviation industry and apply the knowledge to develop tailor-made products for Nigeria. The market has some uniqueness, mainly resulting from the culture of the people, and it should ensure that the services conform to the culture. Additionally, it needs to offer customers competitive prices, especially during its initiation period. It will be useful to make sure that it attracts customers, and gain a share in the market. Once the route is successful, the airline could focus on expanding its operations between Lagos and other parts of the world.

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