Name Rizwan Iqbal

Class BBA

Semester 5th

Roll No BBHM-F17-048

Subject Marketing Channel

Submitted to Ma’am Hina Gill

Contents:
  Executive Summary

 Corporate Vision of PIA

 Corporate Mission of PIA

 Values

 SWOT Analysis

 Pest Analysis

 Market Segmentation of PIA

 Target Strategy of PIA

 Positioning

 Competitors

 Conclusion

Executive Summary:

In 1955 Pakistan international Airline formed. It is 16th largest airline in Asia, operating scheduled

services to 62 destinations throughout Asia, the middle East, Europe and north America, as well as

extensive domestic network linking 24 destinations. 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 government 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 and

major threats are high interest rate, accidents, strong competition by air blue, interest & foreign currency

exchange rate and decline in industry. In pest analysis we find major government active role in increasing

competition in airline industry, inflation rate, turning of social environment of Pakistan. Innovation in

technology, its impact on distribution and cost from industry consolidation. I make segmentation on the

basis of Geographic basis, demographic basis, behavioral basis and physiographic basis than we do the

product evaluation. In it I tell core, actual and 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 and select the marketing

strategy and then give our recommendation.

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-engine

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, in which the latter 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.

Corporate Vision of PIA:

PIA vision is to be a world class airline meeting customer expectation through excellent services on

time performance, innovative products and absolute safety.

Corporate Mission of PIA:

Employee teem will contribute towards making PIA a global airline of choice through offering quality

customer service and innovative product using state of the art technologies. Ensuring cost effective measures

in procurement and operations developing safety culture.

Goals & Objective:

According to PIA 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 of PIA:
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.

SWOT Analysis:
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 Being and Airbus and 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 companies 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

destinations on international basis.

Weakness.

 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 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.

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.

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 overheating 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.

Pest Analysis:

 Political Factors

 Economic Factors

 Social Factors

 Technological Factors

 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 Air Blue

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.

 Economic Factors

Airlines industry has three major players: Pakistan International Airlines, an Air blue, 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.

 Social Factor

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 inflight entertainment systems. Also, word of mouth has a significant impact in the use of

airline services.

 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 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.

Market Segmentation of PIA:

Target 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 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 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.

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 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.

Competitors:

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 product 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 Air blue as a competitor. Air blue 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. Air blue was the first airline in Pakistan to introduce 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 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

 Etihad Airways

 Qatar Airways

 Singapore Airline.

Conclusion:

 PIA down fall is that the company is goal oriented instead of focusing on means used to achieve those

goals. So the problem comes at the implementation stage as they are not people oriented, mean the company

does not involve its middle and lower management in decision making. That is the reason weaknesses occur

and they fail to cope their upcoming threats and unable to create competitive edge in their respective.

PIA has boosted in last few years. Corporate level is planning forward for next upcoming years. PIA has to

changed organizational structure so that it can bring a change and motivation in employees. This will solve

all the problems and conflicts among the company structure from corporate level down to the lower level.

They should motivate their employees and as well as less the overhead cost expenses and other expenses like

labour cost. It should be like less input and high output to improve the corporate level they should heir

responsible people so that they are good in decision making and strategic planning. This can be only done by

good marketing policies.