5Cs analysis of Indian Airline Industry

COMPANY
1. Culture – The Indian airline industry has a strong culture of process
and product innovation. Top management supports the innovative
and creative ideas, and employees are encouraged to participate in
the problem-solving process. The organizational culture supports the
vision, mission and values.
2. Scale of Production – the Indian Airline Industry has a large scale of
production, which enables the industry to achieve the benefits of
economies of scale. Large scale production enhances the
competitive strength of the industry and enables the company to
produce better quality products at reduced costs.
3. Research and Development – The industry spends heavily on the
research and development activities. Heavy investment in building
the IT network, marketing, product design and process optimization
by companies such as Indigo, Spice jet supports the distribution and
promotion strategies.
CUSTOMERS
1. Market Segments
a. The industry targets market segments that are both high-end
and low-end.
b. The choice of wider and multiple sections by the industry has
extended the range of possibilities.
c. It is anticipated that targeted sections will have a constant rate
of market growth in the future.
d. The functional work involves performing key activities, offeri
ng increased services to support family and social meetings, a
nd demonstrating concern and dedication to customer care in
volves emotional work.
2. Frequency of Purchase
In the targeted industry, the amount and frequency of purchases are
high, and both are favourable development indicators. By providin
g more discounts and family deals, Industry players can adapt their
strategies to modifications in frequency and amount.
3. Brand Loyalty
a. Airlines work in the product category of low-involvement.
b. Developing brand loyalty in lowinvolvement markets is usual
ly challenging compared to highinvolvement markets as there
are many alternative choices available and there are also low
psychological switching costs.
c. Customers are cost vulnerable
d. Their price sensitivity, changing tastes and preferences
requires airlines to invest in customer research activities and
observe their behaviour.
4. Customer Needs
a. Critical customer desired features needs to be identified and
should be incorporated into marketing and advertising
strategies
b. Changing attitudes of customers and prioritizing quality over
price also needs to be taken into consideration.

COMPETITORS
1. Bargaining power of Buyers
a. Strong bargaining power of buyers puts downward
pressure on pricing and induces airlines to offer high
quality product at discounted pricing
b. It makes it easier for the customers to switch to other
alternatives
c. Three major reasons for strong buyer bargaining power :
i. High Substitute Availability
ii. A wide number of alternatives
iii. Low economic and psychological switching costs
2. Bargaining power of Suppliers
 a. Weak bargaining of suppliers makes it comparatively a
less strategic issue for the airlines as suppliers cannot
dictate the prices and have to accept the airlines’ terms and
conditions
b. Three major factors:
i. A large number of suppliers
ii. High overall supply
iii. Suppliers’ weak control over their distribution
network
3. Competitive Rivalry
a. Product differentiation is low and and setting the
differentiation basis has become increasingly challenging
b. Intense rivalry is a major reason for Airlines’ declining
profitability.
4. Threat of Substitutes
a. The technological advancement has increased the threat of
substitutes for Airlines.
b. Three major factors affect the threat of substitutes:
i. High performance/cost ratio of substitute products
ii. High availability of substitute products
iii. Low switching cost
5. Threat of New Entrants
a. High level of marketing know-how with huge expenditure
on marketing activities is required to enter the industry.
b. High brand development cost weakens the threat.
c. High capital cost weakens the threat.

COLLABORATORS
1. Collaborators include the downstream and upstream value chain
partners, business allies, community leaders, government and
others. To choose the appropriate collaborator, airlines need to
evaluate different value chain factors, like value chain flexibility,
efficiency, agility, revenue sharing among partners.
2. When operating at an international stage, multinational
organizations like indigo and spice jet should understand the local
preferences of their customers and make all decisions accordingly.
3. An agile and flexible supply chain can make collaboration easier
for the airline industry.
4. Behavior, relationships, choices, purpose and context of the
collaborators should be understood to make the right decision.
Some important factors are:
a. The business environment in which potential collaborators
operate
b. Key strategic priorities and choices
c. The internal and external communication mechanisms
d. SWOT analysis of the collaborators
CONTEXT
The most important analysis to understand the context is the PEST
analysis.
1. Political
a. The present government system requires the airline industry to
study the changing government policies closely.
b. Presence in multiple markets increases the chances of political
instability
c. The geo political risks have increased for the airline industry
due to recent developments in the global scenario
2. Social
a. Population growth and rising low end market segments offer
opportunities to the airlines.
3. Economic
a. Inflation exerts a strong impact on the pricing structure.
b. Sudden changes in the economic policies may affect the
industry (Ex: Demonetization, GST)
c. Presence in multiple markets requires modification in
strategies according to consumer behavior, which is different
during recession and boom.
 d. The downward market pressure and changes in customers’
purchasing power should be kept in mind while taking
decisions.
4. Technological
a. Entry of new players and their investment in research and
development requires Airlines to protect their intellectual
property rights.
b. Technological advancement has shortened the product life
cycles requiring the existing airlines to enhance its value chain
efficiency.
c. Technological development has lowered production cost and
increased the need to restructure the supply chain.