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Rao Muhammad Kamran

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Table of Content

 Corporate vision of PIA


 Corporate mission of PIA
 Values

SWOT ANALYSIS
 Strengths
 Weaknesses
 Opportunities
 Threats

Pest Analysis
 Political Factors
 Economic Factors
 Social Factors
 Technological Factors

Market Segmentation of PIA


 Demographic Segmentation of PIA:
 Geographic Segmentation
 Behavioral Segmentation
 Psychographic Segmentation of PIA

Targeting Strategy of PIA

Positioning of PIA
 PIA’s existing Positioning Strategy
 Positioning by Attributes
 Positioning by Price and Quality
 Introduction of Additional Low Cost Flights
 Positioning by Product User
Competitors Analysis
 Domestic Competitor
 International Competitors of PIA

MARKETING MIX
• PRODUCT
• PRICE
• PLACE
• PROMOTION

RECOMENDATION

 Decentralization
 Strategic Business Unit
 Employee Empowerment
 Overhead Costs
 Two-Way Communication
EXECUTIVE SUMMARY
In 1955 Pakistan international Air line formed. It is 16th largest airline in Asia,
operating scheduled services to 62 destinations through out Asia, the middle
East, Europe and north America, as well as extensive domestic network linking
24 destination.

PIA is a three star international airline. In our report we did SWOT analysis
&PEST analysis on PIA. We find as leading marketing position brand recognition,
superior operating structure, network presence, hub airport at Karachi &
effective use of technology. We identify major strength & weakness of PIA.
Formulating on govt. rules, high depends on passenger’s revenues, high debt &
reliance on oil; prices are major weakness opportunities are like having max.
Routes and fleet, growth demand for low cost airline, customer loyalty, shifting
customer need & industry recovery & major threats are high interest rate,
accidents , strong competition by air blue, interest & foreign currency exchange
rate & decline in industry. In pest analysis we find major govt. active role in
increasing competition in airline industry, inflation rate, turning of social
environment of Pakistan. Innovation in technology & its impact on distribution &
cost from industry consolidation.

We make segmentation on the basis of Geographic basis, demographic basis,


behavioral basis & physiographic basis than we do the product evaluation. In it
we tell core, actual & augmented products of PIA. We do positioning of branding
image of brand than tell about the product life cycle. We select the target market
on the basis of geographic,behavioral,demographic and psychographic. We do
the competitors analysis and study the strength and weakness of competitor,
advantages of competitor. than select marketing objectives & select the
marketing strategy & than give our recommendatio
History of PIA

After a short period of independence, Pakistan decided in 1951 that it needed a national flag
carrier airline; the government of the country accordingly established Pakistan International
Airlines (PIA) in this role, and on 25 May ordered three examples of the Lockheed L-1049C
Super Constellation four-engined airliner as the new operator's initial equipment. PIA flew its
first service with the Super Constellation on 07 June 1954 on the route linking Karachi and Dacca
(now Dhaka), which were the main cities of the country's western and eastern halves, of which
the later is now Bangladesh. On 1 February 1955 the airline flew its first international service,
between Karachi and London via Cairo.

On 11 March 1955 PIA formally took over the assets and routes of another Pakistani operator,
Orient Airways, which had in effect been part of PIA since October 1953. The consolidation of
the two airlines meant that PIA could enlarge its domestic network with 11 Douglas DC-3 and
two Convair CV-240 aircraft, which left the Super Constellation machines wholly free for
international services.

Modernization of the fleet used for domestic and regional operations was now a matter of high
priority, and in May 1956 the airline placed an order for three examples of the Vickers Viscount
815 four-turboprop airliner, the first of which was accepted in the UK on 2 January 1959 for a
debut in revenue earning service on the service linking Karachi and Delhi on 31 January 1959.
Further enhancement came in 1961 with debut of the Fokker F-27 Friendship twin-turboprop
type, of which the first was received on 3 January 1961. The availability of the F-27 for operation
on the routes linking the major Pakistani cities freed the DC-3 fleet for use on new services to the
remoter parts of East Pakistan.

PIA was the first Asian airline with pure-jet aircraft, in the form of a Boeing 707-321 machine
leased from Pan American World Airways for use from 7 March 1960 on the London service
that was extended to New York on 5 May 1961. On 21 December 1961 PIA began to receive its
own jet aircraft when it took delivery of the first of three Boeing 720-040B aircraft, whose
availability permitted the operator to enlarge its international route network.

In 1963 PIA called off its New York service, but on 29 April 1964 became the first non-communist
airline to operate a service to the Chinese city of Shanghai. A notable feature of PIA's domestic
routes in East Pakistan for some time was the helicopter services operated with Sikorsky S-
61N's. PIA ordered four examples of the Hawker Siddeley HS.121 Trident 1E to replace Vickers
Viscount 815s. First of these four Trident aircraft was accepted on 1 March 1966. The Trident
aircraft were later sold to the Civil Aviation Administration of China in 1970. In 1971 East
Pakistan secured its independence as Bangladesh, and PIA ceased operations to that country.
The airline's fleet and network were both reduced, but the service to New York was resumed in
1972.

The first wide-body airliner used by PIA was the McDonnell Douglas DC-10-30 three-turbofan
type, which the airline first received on 1 March 1974. A pair of Boeing 747-282B four-turbofan
aircraft (initially leased from TAP Air Portugal) followed in April 1976, and on 3 March 1980 the
airline accepted its first Airbus A300B4-203 two-turbofan type. In 1985 PIA became the first
Asian operator of Boeing 737-300 aircraft, a total of six Boeing 737-300s were ordered to replace
ageing Boeing 720B aircraft. PIA received first of its six Airbus A310-308 aircraft on 25 June
1991 from Airbus Industrie.
In the first half of the year 1999, PIA acquired five Boeing 747-367 aircraft (initially leased from
Cathay Pacific) for its European and North American destinations. In 2002 PIA signed an
agreement with Boeing Company for the biggest aircraft deal in the history of PIA. After a dry
spell of 10 years, PIA ordered new aircraft - 8 wide-body aircraft from the Boeing 777 family for
its long-haul flights. The airline accepted delivery of its first Boeing 777-240ER aircraft at Boeing
Field in Seattle, USA, on 29 January, 2004. On 2 November, 2005, PIA signed an agreement with
Avions de Transport Regional (ATR) of France to purchase seven brand new ATR 42-500 turbo
prop aircraft. These new 48-seater ATRs will replace PIA's ageing fleet of Fokker F-27s on
airline's domestic and regional route network. On May 31, 2006, PIA received its first ATR 42-500
in Toulouse, France. The remaining six ATR 42-500s were delivered to the airline between 2006
and 2007.

currently the mainstays of PIA's medium- and long-haul operations, with feeder, local and
regional services provided by the Boeing 737-300 and ATR 42-500.

Life has never been easy for PIA, as the flag carrier of a young and developing nation which has
had an eventful history to date, but it is a worthy ambassador for Pakistan and its people. Its
services and personnel have helped to make the country more widely known and her people
better understood in a large part of the world

Vision
PIA vision is to be a world class air line meeting customer expectation through excellent
services on time performance, innovative products and absolute safety

Mission
• Employee teem will contribute towards making PIA a global air line of choice
through

• Offering quality customer service & innovative product

• Using state of - the - Art technologies

• Ensuring cost effective measures in procurement and operations

• Developing safety culture

Goals & Objective


According to PIAC Act 1956 following are the main objectives of PIA Corporation

• To provide further develop safe efficient adequate economical and properly


coordinate domestic as well as international air transport system
• To operate any air transport service or any flight by air craft for a commercial or
other purpose and to carry all forms of aerial work

• To acquire, own, run or participate in the running management of any hotel or


business connected therewith.

• To provide for the instruction and training in matters connected with aircraft or
flight by aircraft of persons employed or desirous if being employed either by the
corporation or by other person.

• To promote any organization outside Pakistan for the purpose of engaging in any
activity of a kind which the corporation has power to carry out

• To acquire hold or dispose of any property whether moveable or immovable, or


any transport undertaking.

• To repair overhaul reconstruct assemble or recondition aircraft, vehicle or other


machine parts, accessories owned by the corporation or by any person

VALUES
Customer Expectations
PIA is the most trusted name in the industry. The reason of its goodwill is according the
expectation of their customers that PIA has fulfilled always. By providing competitive
tariff, extensive care, convenience to their valued and potential customers.

Service
PIA aims at providing valuable and unique services to its customers. They are more
personalized and courteous to their customers. The services are valuable and rare; this is
the reason why customers trust PIA.

Innovation
PIA currently has a number of 43 fleets and aims at increasing this numbers to 53 by the
next few years. PIA is adoptive to changes and believe in innovation that’s create new
ideas and translating these ideas into action.

Reliability
PIA is the most experience airline with its service with more than 53 years. This has built
in PIA has become the most reliable airline. PIA is known for its loyalty and consistency.
Safety
The most challenging responsibility of any organization is to provide complete
satisfaction to its employees and customers together. This satisfaction rewards favorable
and easy working conditions. The in-flight services are customers friendly and the
organizational the organizational environment is also employees oriented.

Cohesiveness
PIA has 12 departments working in their own direction and also provides a number of
services including speedex courier service, catering etc. The most impressive part is these
all department and services are integrated in a cohesive way.

SWOT ANALYSIS
A.STRENGTHS

LEADING MARKET POSITION

PIA is one of Pakistan’s leading air carriers, with more than 800 daily flights. Around
150,000 passengers a month fly on PIA, making it one of the major operators in the
domestic market in terms of passenger kilometers. PIA international market share was
48.4%, In the Domestic market, its market share was 65%. On a system-wide basis, PIA
market share was 48% at the end of year 2009.
Its strong market position is driven by consistently low fares as well as reliable service,
frequent and convenient flights, use of new technologies like e-ticketing and self check-in
terminals, comfortable cabins and superior customer service.

BRAND RECOGNITION

PIA has high brand recall. It is recognized by travelers all over the country. PIA is a
national airline, operating passenger and cargo services covering eighty-two domestic
and foreign.
PIA has earned the number one ranking in customer satisfaction. This strong market
position gives the company a scale advantage and helps it strengthen its brand image.
SUPERIOR OPERATING STRUCTURE

PIA has maintained its position as the low cost carrier. It has been first class Pakistani
airline to use the latest technology. Factors’ contributing consists of different series of
Boeing and Airbus and an efficient, high-utilization and point- to-point route structure.
Flying one type of aircraft significantly simplifies scheduling, maintenance, flight
operations, and training activities. PIA has continually achieved high asset utilization and
employee efficiency. Superior operating structure serves as the primary competitive
advantage of PIA.

NETWORK PRESENCE

PIA enjoys a strong network in key domestic and international destinations. The
company’s network includes three the major airports in Pakistan, as well as major
international airport such as Dubai International Airport. Having a strong network means
that PIA can generate traffic feed for both its domestic and international Flights.PIA
network is spread in 24 destinations on domestic bases and 38 destination on
international basis.

HUB AIRPORT AT KARACHI


PIA operates from its hub in Jinnah International Airport, Karachi. Jinnah International is
one of the world’s busiest airports in terms of number of passengers carried. It is also one
of the largest international gateways to Asia. It is also the leading international air
passenger (and cargo) gateway to Pakistan. The company’s strong presences in airports
with heaviest traffic levels in Pakistan give it a competitive advantage.

EFFECTIVE USE OF TECHNOLOGY


PIA has successfully incorporated latest technology in all its systems, giving it an edge
over competitors. PIA takes credit for introducing most new technologies to the Pakistani
market. It was the second carrier in Pakistan to incorporate the c-ticketing system and the
second in South Asia to introduce self check in systems at the Jinnah International
Airport, Karachi.

B. WEAKNESSES

FORMULATION OF GOVT. RULES


The Basic flaw of this organization is its consolidation that is centralized system. The key
policies, strategies and set of laws are designed by the upper management. The
centralized system is one of the biggest obstacles of long term success of PIA. PIA
centralizes structure lead to barrel between different level of management, decreased
motivation, hard access to information.
HIGH DEPENDENCE ON PASSENGER REVENUES

Passenger revenues accounted for 89.35 percent of the PIA total revenue in 2009. Cargo
services allow airlines to generate additional revenues from existing passenger flights. In
addition, cargo revenues are usually counter cyclical to passenger revenues and have
lower demand elasticity than passenger business, which allows airlines to pass on fuel
price hikes to customers.

DEBT

PIA has a significant amount of 68817616 PKR debts in 2009


. Current and future debts could have important consequences for stakeholders of the
company. For example, debt could impair PIA ability to make investments and obtain
additional financing for working capital, capital expenditures, acquisitions or general
corporate or other purposes. Debts could also put PIA at a competitive disadvantage to
competitors that have lesser debt and could also increase the company’s vulnerability to
interest rate increases.

RELIANCE ON OIL PRICES


PIA sustainability, growth and revenues directly depend on oil prices. A steep rise in oil
prices can seriously damage the long term viability of any airline. Recently many airlines
around the world went bankrupt due to rising oil prices. Airlines need to hedge against
this risk by taking proper measures.

C. OPPORTUNITIES

HAVING THE MAXIMUM ROUTE AND FLEET


PIA is having the maximum route and fleet domestic and international destinations
network in Pakistan as compared to its Competitors. Route and fleet expansion will
positively impact the company’s operations by increasing revenues.

GROWING DEMAND FOR LOW COST AIRLINES


The growing demand for air travel is driven by lower fares and consumer confidence. A
survey by International Aviation Authority showed that ticket price is the number one
criterion for passengers when selecting a flight, well ahead of the availability of a non-
stop service.

CUSTOMER LOYALTY
PIA frequent flyer and loyalty programs can help it retain customers. PIA award plus
(frequent flyer program) was established to develop passenger loyalty by offering awards
and services to frequent travelers. Such schemes encourage repeat travel on PIA, as
passengers seek to accrue the benefits given to regular travelers. This enables the airline
to retain customers and reduce costs, as it does not have to spend money targeting new
customers to replace those lost to other airlines.

SHIFTING CUSTOMER NEEDS


The needs of air passengers are increasingly changing, as they are becoming more and
more price sensitive. If PIA succeeds in making its prices more competitive, then the
company will be able to gain significant market share.

INDUSTRY RECOVERY
Market analysts believe that the global airline industry will experience an upturn in
fortunes over the next few years. This represents an opportunity for PIA, as it could
generate increased revenues and command market share if it capitalizes on increases in
demand.

D. THREATS

HIGH INTEREST RATES

The past few years have seen State Bank of Pakistan impose high as well as low interest
rates to check inflation and the over heating of Pakistani economy. Inflation in Pakistan
may see another raise in the short-term.

ACCIDENTS

There had been five accidents with PIA listed as below:

• Pakistan International Airlines Flight PK 705 was a Boeing 720 – 040 B that crashed
while descending to land on Runway 34 at Cairo International Airport on May 20, 1965
resulting in 119 fatalities.
• Pakistan International Airlines Flight PK740 was a Boeing 707-340C that crashed after
takeoff from Jeddah International Airport on November 26, 1979. All 156 aboard were
killed.
• Pakistan International Airlines Flight 268 was an Airbus A300B4-203, registration AP-
BCP, which crashed on approach to Kathmandu's Tribhuvan International Airport on
September 28,1992 All 167 on board were killed.
• PIA Flight 554 is the flight number of a Pakistan International Airlines (PIA) Fokker
F27 that was hijacked on May 25,1998. The flight started its journey at Gwadar in
Balochistan after originating in Turbat, and was flying to Pakistan's southern port city
of Karachi. The aircraft was carrying 24 passengers and 5 crew members.
• Pakistan International Airlines Flight 688 (PK688, PIA688) was scheduled to operate
from Multan to Lahore and Islamabad at 12:05 pm on July 10, 2006. It crashed into a
field after bursting into flames a few minutes after takeoff from Multan International
Airport. All 41 passengers and four crewmembers on board were killed.
PIA has to continuously ensure utmost safety and security of its passengers. Accidents
can adversely affect customer confidence in PIA and result in declined revenues
intensifying competition.

STRONG COMPETITION BY AIRBLUE

PIA is now competing against carriers such as Airblue and Shaheen Airline. PIA remains
Airblue’s strongest competitor because of the huge market it has gained over time, strong
brand image and customer loyalty.
PIA has started new low-fares subsidiary “PIA Express” to stop the Airblue market share
growing to fast. Moreover, major legacy airlines have been focusing on restructuring
costs, which has improved their competitiveness. With costs restructured, the legacy
airlines are becoming more formidable competitors in terms of increasing capacity,
matching prices and leveraging their frequent flier programs. Increasing competition
could adversely affect the company’s margins.

INTEREST AND FOREIGN CURRENCY EXCHANGE RATES

Fluctuating foreign currency exchange rates can have a significant impact on PIA’s
earnings. For example, as PIA is providing its services to the UK. Negative or positive
effects arise from exchange rate movements as change in expenses. Strengthening of
foreign currencies against the British Pound will positively impact PIA and vice versa.

DECLINE IN AIRLINE INDUSTRY

A number of factors have caused the current decline in the airline industry. For example,
the threat of further terrorist attacks since September 11 and a fall in the number of
business travelers have both caused passenger numbers to fall. These and other factors
may continue to affect demand for air travel in the future, which will affect revenues of
PIA. The threat of terrorism may discourage people from traveling by air and could
especially reduce the number of passengers traveling on international flights.

• Emirates Airline
PEST Analysis
POLITICAL FACTORS

Political factors always have a great influence on the way businesses operate in the airline
industry and the spending power of customers. In recent years it has been observed that
government played an active role in increasing competition in the airline industry. A
number of new airlines such as AirBlue and JS Air have been awarded licenses to enter
the domestic market. Pakistan has achieved some political stability in recent years. If the
management of PIA believes that the present government will perform well
(consistently), then there will be more investment in the form of purchase of new
airplanes and latest technology. The over all industry will grow resulting in more
luxurious and comfortable flights. With the military takeover government policies have
become more liberal.

ECONOMIC FACTORS

Currently, Airlines industry has three major players: Pakistan International Airlines, an
Airblue, Aero Asia and Shaheen Airlines. Their target market includes domestic travelers
as well as Pakistanis living abroad particularly in the UK and USA. These countries have
strong economies coupled with high purchasing power. Customers’ purchase behavior
depends very much on prices of the competing airlines as well as services offered. As
inflation rate is unstable in Pakistan, spending power of consumers has effected in the
long term. In fact growth in Pakistani economy has resulted in an increase in spending
power and has positively impacted the airline industry.
Economically, the new millennium has been highly volatile; the September 11 attacks
revolutionized the whole world. Consequently, there was a global depression in the North
America, South America, Australia and Europe. However, in Asia especially Pakistan the
effect in the short term was otherwise. The economy began to boom because of greater
remittances from abroad and whole sum immigration by expatriates. As a result, demand
for air travel in South Asia rose.
Economic conditions of Pakistan are however improving. PIA has cost a advantage over
its competitors because of its newly acquired, improved, long distance aircrafts from
Boeing’ which give longer range and better fuel economy than any other jet currently
produced. This cost advantage is a barrier to entry for new firms. However, this cost
advantage will not be significant on domestic routes.

SOCIAL FACTORS

The social arid cultural influences on business vary from country to country. The social
structure of Pakistan is closely tied. The trend is now changing as the general public is
educated and is pursuing professional goals. Customers are more aware of market
conditions and available options and want to get best value for their money. They spend
considerable time and money on entertainment hence increasing the need of in-flight
entertainment systems. Also, word of mouth has a significant impact in the use of airline
services. Hajj attracts a huge number of customers.
The social environment of Pakistan is turning liberal with the new regime. The initiative
to automate check-in and ticket booking process might not be very popular with the
general public (even educated population) is still technology averse. E-ticketing might
also face significant challenges as consumers are generally reluctant to provide their
credit cards information over the phone and the internet. The consumers, however, have a
warm reaction to the prospect of less costly but quality service flights.

TECHNOLOGICAL FACTORS

Technology is vital for competitive advantage and is a major driver of the airlines
industry. Major technological changes are taking place in the airlines industry with
innovations in the reservations and booking systems. In-flight entertainment systems and
auto check in counters are two examples of such innovations. Internet plays a key role in
e-ticketing as consumer can easily reserve tickets or check the status of the flight. A key
issue will be the extent, to which technological advancements (such as Internet) impact
distribution and cost synergies from industry consolidation, can offset upward pressures
on costs. PIA has always led the path of technological innovations by introducing new
technologies ahead of its competitors such as its auto check-in counters which has helped
it gain market share. It was the first airline in Pakistan to install Sabre system followed by
the market leader.

Market Segmentation of PIA

Demographic Segmentation of PIA:

• Income Segmentation
• Occupation Segmentation

Geographic Segmentation

In this segmentation PIA focuses both on segments


• Domestic
• International
Behavioral Segmentation

• Occasion Segmentation.

 Hajj’s Occasion.
 Eid’s Occasion.
 New Years’ Occasion.

• Loyalty Status

Psychographic Segmentation of PIA

• Social Class

 Tourists
 Religious Travels
 Pakistani Expatriates

The existing market segmentation strategy of PIA is reasonable enough because it covers
all necessary parameters that are to be focused in doing market segmentation for Airline
Company.

Product Evaluation
Core Benefit
• Services
• Timings
• Safety
• Reliablity

Actual product
Actual product is traveling services .

Augmented product

• Providing map.
• Providing transport facility.
• Hotel facility
Product and services classification
Consumer product
PIA comes in the head of consumer product because it is used by he final
consumer. No any other process occurs in this product.

Shopping Product
PIA lies under shopping product because it is less frequently purchase. high pries ,
selective distribution places,

Specialty Product
PIA lies under specialty product because strong brand preference and loyalty, high prices,
distribution at few outlets.

Individual Product decision


.
Branding
Brand is a name, term, sign, symbol or design or the combination of these that identifies
the maker or seller of a product or services. in our product PIA is our brand name which
help consumer to identify product that might benefit them. Branding give some benefit to
seller. It provides legal protection.

Brand image

• PIA has a good image due to following factors


• Lower crash rate in the world
• First class ranking in customer satisfaction
• Covering 82 domestic and foreign
• Largest market share in Pakistan 48%
Product life cycle

Product life cycle have five stages


• Development
• Introduction
• Growth
• Maturity
• Decline

Our product lies in growth stage due to following reason

• Increase in sale
• New feature offering
• Competitor’s entry
• Increase in investment
• Expense increase

Financial performance

The profitability of PIA is published in the 2009 annual report with figures in millions of
Pakistani Rupees.[17] The following table gives the key financial results for the end of year
period of the financial year. PIA explains that the loss was caused by two factors: the
weakening of the Pakistani rupee and the rise in crude oil prices during 2009.
Financial trends for the airline from 2004–2009.
Operating performance
Year Revenues Rs Millions Profit/(Loss) Rs Millions
2009 94563 (58224)
2008 89202 (35880)
2007 70,481 (13339)
2006 70587 (12763)
2005 64074 (4412)
2004 57770 2303

Market share of PIA


• Domestic 60 %
• International 48.4 %

Unique feature offer by PIA


• Reliability an d safety
• Has best engineering facilities.
• Has best trained pilots.
• National flag carrier.
• Pakistani expatriates when step in the PIA plane they get they homely feelings
because of the national airline which plays a role of ambassador.
• High linkage to the remote areas of Pakistan.
• Using state of art technologies and highly equipped engineering.

Positioning of PIA

PIA’s existing Positioning Strategy

Currently PIA positions itself within the following positioning strategies.


• Positioning by attributes.
• Positioning by price and quality.
• Positioning by product user.

Positioning by Attributes

In this strategy PIA positions itself in the mind of the consumers as the reliable air
transport service provider. Because from all the airline companies of the world PIA has
the least crash rate. By positioning the reliability attribute of the airline in the minds of
the consumers, people prefer to travel from PIA. Because of the safety attached with the
PIA.

Attribute of safety is also associated with the airline as PIA has the following
certifications
.
• European Aviation Safety Agency (EASA)
• IATA Operational Safety Audit (IOSA)
• Civil Aviation Authority of Pakistan ( in accordance with the International Civil
Aviation Organizations Standards)

Positioning by Price and Quality

In this positioning strategy, PIA paints the image of being the less price taker and
providing high quality to the customers as compare to the competitors. Examples is given
below.

Introduction of Additional Low Cost Flights

“PIA express”

PIA has introduced additional low cost flights. PIA express at 20% less fare.

• This facility is available in Business Plus, Economy Plus & Economy C lass.
• No meals.
• Stand by fares applicable.
Positioning by Product User
PIA positions itself as an ambassador of Pakistan in the world. Pakistani expatriates
residing outside the country feels proud when they see an airline of their own home-
country carrying the national flag. This arises the loyalty factor in the hearts of the
expatriates and they prefer to travel by PIA.
Targeting Strategy of PIA

PIA’s Existing Target Audience

From the Demographic Segmentation, PIA is targeting the income and occupation
oriented people. The classification of both categories is as follow.

• Income Segmentation

From income segmentation of PIA, those who falls under the category of upper class and
upper middle class.

• Occupation Segmentation

From occupation Segmentation that PIA is taking in to account, there are two main sub
heads of working class and business class. The working class includes all those who are
working as an employee inside and outside the country. In business class all those people
are included who are having business.

From the Geographic Segmentation of PIA. All the audience from the domestic and
international regions are included. In domestic people within the country are included and
people residing outside Pakistan.

From the Behavioral Segmentation PIA‘s target audience is categories as follow.

In the occasion based market segmentation of PIA.

• Hajj’s Occasion.

When Hajj operation in going all those people flying from different cities of Pakistan to
Saudi Arabia for the performance of Hajj.

• Eid’s Occasion.

When Eid occasions are near people within the cities and outside the country move to
their homes for having Eid Occasion together with family.
• New Years’ Occasion.
Now people prefer to have New Year with their family that’s why all those people
coming back to Pakistan from different countries or moving outside Pakistan to different
countries and also all those people moving within the country are targeted over here.

• Loyalty Status.

PIA gives different benefits to the fliers. But all those who travel a lot get the benefit of
frequent fliers which carries few discount rates on the tickets. To such audience PIA not
only gives the discount facility but also the facility of pick and drop to them.

From the Psychographic Segmentation of PIA, the target audience of PIA will be the
following.

• Social Class

In Social Class PIA targets the tourists, religious travelers and Pakistani Expatriates.

• Tourists

All the tourists from different regions of the country or from different countries come to
Pakistan for tourism purpose or go outside the country. Because PIA is having highest
rate of linking the remotes areas of Pakistan.

• Religious Travels

All the religious travelers for example people going for Hajj etc are targets over here.

• Pakistani Expatriates

As PIA is a national flag carrier airline that’s why people residing outside the country
feel a unique sort of feeling to get into the National Airline. PIA is not just and Airline
but also acts as the ambassador of Pakistan in the whole world.

Competitors Analysis

Competitor analysis in marketing and strategic management is an assessment of the


strengths and weaknesses of current and potential competitors. Created by Michael Porter
competitor analysis focuses on four key aspects: competitor's objectives, competitor's
assumptions, competitor's strategy, and competitor's resources and capabilities.
Competitive Advantages of PIA
• Reliability an d safety
• Has best engineering facilities.
• Has best trained pilots
• National flag carrier.
• Pakistani expatriates when step in the PIA plane they get they homely feelings
because of the national airline which plays a role of ambassador.
• High linkage to the remote areas of Pakistan.
• Using state of art technologies and highly equipped engineering.

Competitive Position of PIA

The competitive position of PIA is Differentiation because PIA has created highly
differentiation products e.g. for the economy class and for the business plus class. PIA
has different and unique product characteristics and features which cater the needs of the
respective customers.

Competitive Moves
PIA is having 48.4% market share internationally and 65% domestically, and PIA has the
Market Leader Competitive Move in Pakistan.

Competitor Attack Strategy


The attack strategy of PIA against its competitor Air Blue is Flanking Attack Strategy.
Air Blue has not that much access to the remote areas of Pakistan than PIA has. Due to
this weak point of Air Blue, PIA is attaining the flanking attack strategy against the Air
Blue.

Existing Competitors of PIA


PIA operates both domestically and internationally. So it has different competitors on
both scales of operations.

Domestic Competitor

Within the country PIA has Airblue as a competitor. Airblue is a private airline based in
Karachi, Pakistan. It is a scheduled domestic and international airline operating 30 daily
services linking seven domestic destinations and international services to Dubai and
Manchester. Its main base is Jinnah International Airport, Karachi. Airblue was the first
airline in Pakistan to introduce e-ticketing, wireless check-in and self check-in kiosk
facilities.
Achievements and Recognitions

• Pakistan's fastest growing airline.


• First airline in Pakistan and only the third carrier in the region behind Emirates
Airline and Royal Jordanian to introduce the latest self service check-in facilities
at Jinnah International Airport, Karachi
• First private airline in Pakistan to fly long-haul international route (Islamabad-
Manchester) with a refueling stop at Ankara, this has since been moved to
Trabzon.

International Competitors of PIA

PIA is having market share of 48.4% in the international market and having tough
competition from its international competitors. Following international competitors of
PIA.

• Thai Airline
• Ethad Airways
• Qatar Airways
• Singapore Airline

Market Share Analysis


PIA Air Blue Shaheen
Market Share 48 % 35% 15%

Marketing object
Satisfying the loyal customers
Bring back the customers which shifts toward the competitors
Increasing marketing share

Marketing mix
Marketing mix is the set of marketing tools that the firm uses to pursue to its marketing
objectives in the target market. There are literally drozen of marketing mix tools.
McCarthy classifies these tools into: product, price, place, promotion. Is called 4 p”s of
marketing.

Product

The product is any things which have both favorable &unfavorable that a person receives
in exchange. Most products we think are physical but it also include services. PIAC is
also providing services to the nation, which can be categorized as follow

Seat services (for passengers)


Space services (for cargo)

The characteristics of services by PIAC are in the following line

Intangibility

Services provide by PIA are intangible. Unlike physical product, they can not seen ,
tested , heard or smelled before the purchase. To reduce the uncertainty, the buyers will
look for signs and evidence of service quality. They will draw interface about the
quality of service from place, people, equipment, communication material symbols and
price that they will see.
PIA task is to manage the evidence to tangibles the intangible.

Inseparability
Services are typically produces and consumed at the same time. If the service is rendered
by a person, than the person is a part of service. Since the client is also present as the
service is being produced.

Variability

Services are highly variable, as they depend on who provide them, when and when and
where they are provided. Services firm can take two steps towards quality control. The
first step is investing in good personnel selection and training. PIA spends a large sum of
money to train their employees in providing good service. Second step is monitoring
customer satisfaction system and PIA doesn’t monitor customer satisfaction properly.

Perish ability
Services can’t store and they have no self life. When demand fluctuates, service fires
have difficult problems, like PIA has to apply much more equipment because of peak
period demand on a specific route than it would, if demand, was even throughout the
year.
PIA uses following strategies for producing a better match between demand and supply.

On the demand side


Differential pricing to shift some demand from peak to off peak period.
Non peak demand can be cultivated
Reservation system is one way to manage the demand level, and PIA employee
extensively

On the supply side


Peak time efficiency routines are introduced. Employees perform only essential tasks
during peak periods.
Shared services are developed by interline agreements.

Price
A profit organization faces the task of setting a price on their product and services. Price
is the amount of money that customer willing to pay for the services. How are prices set?
PIA set their prices on the basis of two type of situation.

• Domestic routes
• International routes

Domestic routes
Prices for domestic route are fix by the government of Pakistan for PIA. The cost plus
method is used to set the price at domestic level. The PIA management estimates the
price by using following 6 steps.
Selecting the price objective
Determining the demand
Estimating costs
Analyzing competitor price and offers.
Selecting a price method.
Select the final price.

International routes.
The price for international routes is set by international air travel association (IATA).the
IATA doesn’t allow any discount on any international routes. Ticket show the full pries
for the route while air lines charge discounted fare by cutting their share of profit.
However, PIA establishes the pricing strategies on different international routes keeping
in view the following points .
Competitor price
Cost of operation
Type of aircraft used
On the other hand PIA has three categories of their pricing as below, they also vary by
season to season and at peak time

• Higher prices
• Shoulder prices
• Low prices

Countries Higher prices Shoulder price Low price


PKR PKR PKR
UK 67450 53750 45500
DUBAI 57650 49550 42500

Place
Marketing channels can be viewed as sets of independent organization involved in the
process of making a product or service available to use. A distribution system is a key
resource. PIA has partially owned distribution system.

Level of channel
According to our opinion, PIA uses two level of channel which are as follow”.

Zero level channels


It is also called the direct marketing channel. Now the PIA sells the tickets to final users
through its ticket counter. In Lahore, PIA has ticket and booking office to different place
to sell the ticket to customer. These offices are computerized and directly linked with the
head office at Karachi.
One level channel
Here traveling agents and intermediaries are involved in selling the ticket to customers.
Many travel agents are provided auto ticketing and reservation system. Ther are two
types of agents which are defined as follow,

IATA agencies
There are 30 IATA approved agencies which deal with PIA.These agencies can also be
stocked and sell tickets of other airlines. Commission of these agents is as follow,
International sector = 9%
Domestic sector=5%

District sector agents.


These are agents who exclusively deal with PIA ticket and cannot deal in other air lines
normally these are located where PIA does not have sale point.
The commission provided to general sale agents is
International sector=12%
Domestic sector=5%

Promotion
PIA is not invested much in this area. They just use brochures, news paper & some T.V
commercial when peak season is not there. Agents play an important role in promotion as
they convince traveler to travel through pia. Some brochures, are listed below

• Umrah made easier.


• PIA offers more flights to Jeddah in may, june and julyfor umra.
• These additional flights will not only provide more travel option to umra pilgrims
but also enable more people to perform the holy ritual
• Pilgrims can enjoy comfortable & luxurious journey in Boeing_777s
• PIA “budget flight – enjoy up to 39% discount on regular
fares.
• PIA introduced Budget Flight between Karachi, Lahore & Islamabad.
• Fly PIA:s new ATR
• Up to 10kg hand baggage allowed
• No checked in baggage
• Condition apply

• PIA flexible fare_ plan ahead & pay less


• Book international or domestic flights as early as possible because the earlier you
buy, the cheaper you fly.
• A variety of discount in Business, Economy Plus & Economy Classes.
• The benefit of even lower fares in the lean travel period.
• Flexible fares are applicable on sectors where revenue management is
implemented.
• Condition applies.

• Fly business class with a free ticket.


• Buy three tickets and get one free
• Buy one ticket and pay only 50% for your companion
• The offer is available on international routes onlu
• This offer is not available on UK, USA& Canada sectors

• Discount to student on international and domestic sector


• 25% discount offered to students on domestic routes

• 10% discount on international routes

• offer can be availed exclusively from PIA Booking offices.

• The offer is available only for Economy Class passengers.

• Free pick and drop service

• PIA offers the free pick and drop service from your door to airport.

• This offer will be offer only for Business class

Our recommendation.
This strategy is applicable when

• Oil prices remain un change


• Decentralization
• Employee empowerment
• Over head cost
• Two way communication.