ASSIGNMENT -1 OF E-Marketing

SUBMITTED TO Mr.Abhisek Dutta

SUBMITTED BY Kuldeep Tiwari Reg no-10809869


Emphasis on direct sale of ticket through Internet to avoid fee and commissions paid to travel agents. GoAir and IndiGo after the success of Air Deccan in 2003. and that cut waste and hassles. precise. The airline currently operates 120 daily flights with a fleet of nineteen brand new Airbus A320 aircraft and flies to 17 destinations. It was awarded the title of „Best Domestic Low Cost Carrier‟ in India for 2008. IndiGo plans to serve approximately 30 Indian cities by 2010 The key factors of the business model of IndiGo airlines:    A single passenger class. Because of the introduction of liberalization policy in the Indian aviation sector. seamless. On one hand. The growth in the aviation industry looked promising and hence attracted many low cost carriers like SpiceJet. increased the operational costs The IndiGo team uses all of these resources to design processes and rules that are safe and simple.In 2006. the private carriers accounted for around 75% share of the domestic aviation market.  Developing Greenfield airports with private sector 2 .Introduction India is one of the fastest growing aviation industries in the world. Single type of airplane to reduce training and service cost. that make sense. lounges. the booming opportunities incited players to expand capacity but on the other hand. which in turn ensures a uniquely smooth. gimmick-free customer experience at fares that are always affordable. rising fuel costs and taxation rates. No frills such as free food/drinks. the industry has witnessed a vast difference with the entry of the privately owned full service airlines and low cost carriers. Unbundling of ancillary charges to make the headline fare lower. Employees working in multiple roles.

Porter’s Five Forces strategy for Airline Industry Threat of New Entrants: • Product differentiation: In low cost carriers. In India. 3 . Operator should be a citizen of India or a company or a body corporate which is registered in India and whose principal base of business is in India. which is under their control. • Fuel prices: Domestic ATF prices have increased by over 160 per cent from the beginning of 2005 till last year and by over 80 per cent from a year-ago levels. Private sector is allowed to operate scheduled and non-scheduled services. kerosene and LPG at way below cost. stair-free ramps. 2. Due to liberalization Indian aviation industry is now dominated by privately owned full-service airlines and low-cost carriers. IndiGo provides check-in kiosks. The government's open sky policy has encouraged many overseas players to enter the aviation market. Private airlines account for around 75 per cent share of the domestic aviation market. 3. As a result. imports are becoming expensive day by day and at the same time. The switching cost of an airline company to other business/industry is high as the exit cost is high. The switching cost is not high. 2. With rising crude oil prices. there is not much differentiation in the basic service that is being provided to the customers. petrol. Differentiation can only be achieved by Value Added Services. As a result prices of ATF in India are much higher than some of the other Asian countries. 4. Hence this argument works in favor of IndiGo. • Switching cost: 1. oil companies do not import ATF directly. the state owned oil marketing companies (almost 95 per cent of the market is with state owned firms) are forced to sell diesel. In aviation industry the major entry barriers can be: • Government regulations: 1. Aviation was primarily a government owned industry. the government is unable to pass on the full impact of this rise to the consumer. instead they refine it from imported crude oil. and “Q-Busters”. a cost they are trying to somewhat make up by raising the price of ATF. Customers can easily choose other low cost carriers.

   IndiGo fleet comprises of Airbus-A320 and the switching cost is high due to the limited number of suppliers. Fleet Forecast for the India-Region 2006-2011 shows that there will be approx.ATR-42 but do not meet the requirements to serve the low cost commercial aircraft carriers. 4 . particularly IndiGo airlines. Hindustan Petroleum Corporation. Thus. The brand value of suppliers is high due to their less number and results in higher bargaining power for them. Bargaining Power of Buyers  Buyers in airlines industry are large in number and highly fragmented thus lowering their power . There are other suppliers like Dauphin. The suppliers are few and thus in better position to bargain as they always finds customers for their aircrafts. Airbus and Boeing. they possess more power.With the growing Indian economy and increasing low cost carriers. 85% growth in the order rate of air carriers. The airlines also face a threat of forward integration since the suppliers are in close contact and are familiar with the knowhow of the aviation industry.Dronier.Bargaining Power of Suppliers  Any airlines in general face a duopoly of two major suppliers of aircrafts i. There are only four suppliers for ATF (Aviation Turbine Fuel). the buyers have increased and so have the growth opportunities.e. Due to shortage of commercial aircraft pilots in India the supply of pilots is concentrated. suppliers are few and thus in better position to bargain as they always finds customers for their aircrafts.     The proof of evidence for high power enjoyed by ATF suppliers lies in the fact that the ATF prices constitute 35-40% of the costs in India compared to 20-25% globally.Bell. Bharat Petroleum and ONGC and since their number is limited. hence increasing their power. IOC.

Below are the major reasons for the high competition in the low-cost carrier airlines:     Very little scope for differentiation between competitors‟ products and services Aviation is a mature industry with very little growth. It is not difficult to move from one airline to another or to switch to a substitute.e. Hence supplier‟s bargaining power is high.   The switching cost is minimal since there are multiple alternatives available. Furthermore the players in the particular strategic group do have minimalistic differentiating points.. Switching cost of customers is high for low cost carriers. there is no brand loyalty.e. i. Backward integration from the buyers end is very difficult and next to impossible. Boeing and Airbus. Suppliers of aircrafts are the same.. Below is brief description about each of them: 5 . i. Competitive Rivalry The aviation industry is a highly competitive industry because of which it is difficult to earn high returns in this sector. Closest competitor of IndiGo is SpiceJet followed by GoAir. The only way to grow is by stealing away customers from competitors.

6 . So if we consider IndiGo airlines. the direct substitutes are the other low cost carriers like SpiceJet and GoAir. Secondly. So in this case. many customers use airlines as a status symbol.Availability of Substitutes: The substitute for low cost airline company is the railways. trains cannot substitute for prestige. So trains cannot work as a substitute to save time. So again. threat of substitutes is high as the switching cost between low cost carriers is low. But this substitute is not very powerful due to the following reasons:   Customers use airline transport as it is convenient and saves travelling time.

The flight density of IndiGo airlines is limited in domestic market. hence there is a big scope to increase the flight frequency. Highly efficient management that ensures high rate of on.1 million by 2010. as these can be easily imitated by the competitors. 7 . Ease of ticket bogoking for customers.2 million in 2007.time arrivals.Swot Analysis of Indigo Airlines Strengths          IndiGo has high brand awareness and brand equity. Weaknesses Scope of product differentiation is less. Tie-up with hotels.4 million tonnes per annum. an aviation consulting firm estimates the cargo services of 3. IndiGo is not exploring the untapped domestic air cargo market. Indian domestic traffic will touch 86. According to a research conducted by PhoCus. A study by Centre for Asia Pacific Aviation or CAPA6. Benefits of the innovations implemented by IndiGo to provide better services to the customers are short-lived. Opportunities  IndiGo airlines have not ventured into the huge air freight market which can contribute a sizeable portion of the revenue. Cost leadership: Successful implementation of low cost strategy.up from 32. Continuous innovation to improve on non price factors.

Extensive Government Interference can affect the accountability of the organization. recession has hit aviation industry as well. foreign investments (e. This can greatly affect the day to day business in the airline industry. Threats    ATF (Air Turbine Fuel) prices have increased radically since 2005 Foreign and private players often poach work-force of competitors. FDI policies). tourism laws. government has control over fuel prices. Like every other industry. taxes etc. IndiGo airlines should focus on long haul aircrafts both for domestic and international sectors. 8 . IndiGo currently does not have too many long haul aircrafts and as per CAPA study by 2020.g. People have cut down on tourism and corporate travels have also been slashed down.  The huge untapped international sectors should be explored once IndiGo has a considerable presence in the domestic market. Indian Airports are expected to handle more than 100 million passengers.  The chartered flight services still remain an area not exploited by Indian aviation industry and IndiGo airlines can play a major role in tapping the potential in that particular market. In aviation industry.

co-pilots and ground staff is severely limiting the growth prospects of all the airline companies. Barriers to exit in aviation industry are high because of high capital investment. IndiGo Airlines has demonstrated a strong commitment towards using word-of-mouth (WOM) marketing by sending out emails. You just need to click on a link to get to the page of the actual content.  The shortage of trained used by Indigo airlines IndiGo: Viral Marketing In one of the best examples of an Indian company engaging in Viral Marketing. These emails are simple. The content also has been carefully crafted. So far I have received 2 of the emails in this series: 9 . no government restrictions and loss of brand image. Types of e. easy and contain plain text only – to avoid making it look like SPAM.

pect to hygeine. are often accused of poor levels of customer service and lack of attention to detail with res. The strategy clearly has been to attack “claims made by competition” – claims which say that others have better „on-time performance‟. in another of the BOLD statements.Email 1: (Click to go to the Actual Link) If you click on the Image above you are taken to a flash video (again. Low-cost airlines (popularly and colloquially known as “LCCs”). Attack false claims (backed by validated research data) 2. neatly designed using the trademark indigo colours – purple and white). We don’t belittle you. USE your loyal customers by spreading word about false competitor claims 10 . IndiGo has this to say about Customer Service: At IndiGo we respect our customers. 2 -marketing strategy lessons here: 1. In fact. et al. talk you down or insult you. The video contains a series of texts where IndiGo quotes from surveys and makes BOLD statements in comparison with other airlines – Kingfisher. Spice Jet. Both of these have been adequetely dealt with. for instance.

This did not have a series of statements. The indigo airlines used viral marketing through mail to the customer 11 .Email #2: The visual says it all. Just this image.

In Airline industry. There have been various developments in the areas of strategic alliance. It has acquired Jet Lite (India) Limited (earlier known as Sahara Airlines Limited) in 2007. customer service facilities. One such success factor is the carrier‟s ability to handle the transaction costs. For example. religious packages. and flight cancellation costs would reduce in this case. business packages. companies in order to minimize their transaction costs would want to organize their activities. Trends and success rate at the recent years have shown that the success of the airport and airlines depends on a lot of critical factors. hill station trips 12 . the alliance proved to be financially beneficial for the companies. God's Own Country. When transaction costs are high especially due to uncertainties from the supply side. The industry had witnessed periods of boom and strong economic growth along with the entry of new carriers and expanding businesses. After privatization. Although this might have resulted in some job losses. mergers and acquisitions and capacity increase by various airlines in the race to compete against each other critical success factors to be looked in for while devising strategies for an Airline industry player. majority of the incumbents have performed well to get a higher market share than the state owned Air India. In general.Mini case of Indigo airlines( Success Factors of Airline Industry) The airline industry is a rapid evolution towards a new market form. they would like to combine their operations under one corporate name. The approach with more increasing focus towards low cost transport and air freight has become USPs of many airlines across the globe especially the so called “low cost carriers” (LCCs). Jet-Airways in order to reduce its expenses or acquiring other players. The two airlines have joined forces in a number of service and infrastructure programs in order to reduce their expenses. there are certain critical factors which can give an incumbent high success rate and competitive advantage over others. Sales and marketing costs. There have been entries in the airline industry in the form of low cost carriers after the deregulation in 2003. IndiGo Airlines offering a diverse array of packages for its passengers: Holiday packages. The Air transport industry has been like an economic laboratory where new trends and evolutions have taken place.

  The shortage of trained pilots. understand and address the issues faced by them and appeal to a broader section of people. the firms have launched a Wireless Application Protocol (WAP) site for mobile users.g. Many studies have shown that the FFP is an effective marketing tool in this industry. People have cut down on tourism and corporate travels have also been slashed down. The most popular way of increasing the customer loyalty is to set up a frequent flyer programme (FFP). This is made possible due to the advancement of communication and information systems.and Goa's sun & sand. increase the awareness of the company on a global level. 13 . Extensive Government Interference can affect the accountability of the organization. This initiative started by Jet Airways and other players has helped the firm to connect with its guests. no government restrictions and loss of brand image. Social Media marketing helps to capture the audience through the rapidly growing accounts on Facebook and Twitter. Barriers to exit in aviation industry are high because of high capital investment. Marketing is also done through partnering with credit card companies to provide discounts. foreign investments (e. recession has hit aviation industry as well. government has control over fuel prices. In aviation industry. Like every other industry. tourism laws. When an incumbent faces a problem of a new entrant or an existing player increasing its capacity by opening new routes. This can greatly affect the day to day business in the airline industry. the incumbent can overnight redeploy aircraft and secure gates and ground personnel immediately to react to the entrant. Challenges    ATF (Air Turbine Fuel) prices have increased radically since 2005 Foreign and private players often poach work-force of competitors. spokespersons and customer loyalty programmes. Investment in Technology is another critical factor in today’s scenario. There are several promotional strategies such as including fare promotion. co-pilots and ground staff is severely limiting the growth prospects of all the airline companies. FDI policies). Also. taxes etc.

Indigo has successfully implemented the low cost strategy with its value added services but still it has huge potential to capture more market if it can establish itself internationally. Once the above strategy is successful and results in promising revenue growth. IndiGo can gain competitive advantage over its competitors as the first mover. So using the cost leadership strategy. we recommend that IndiGo must increase its domestic operations by starting flights connecting to new destinations and long haul flights. expand its services to cargo.and internet to promote the brand and create awareness among the customer. Recommendation As inferred from the above two solution analysis. the other low cost carriers may also venture in this area. As the opportunities are vast for this purpose. Despite of the fact that product differentiation in low cost carriers is very less with many established players in the market. Open sky policy and deregulation have further opened space for many players to enter the market. Use facebook . IndiGo can use extension to freight and chartered services as the next objective for further expansion.twitter.Strategies   Use viral marketing for promote the products . Conclusion Low cost airlines have huge potential in Indian market and they are many players entering the market targeting at the price sensitive segment. 14 . Upgrade to long haul aircrafts as per demand and Continuous innovation of value added services.

15 .

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