Differentiation Strategy by Airlines
SM -II
Differentiated Product
Higher Price & Margin
Product
Marketing Large expenditure on promotion/
Strategies marketing
Focus on the target market
Economies of scale not as
important
Overall differentiation
Building corporate & brand image
Production/opera Invest in marketing, quality,
tional strategies service, reliability & channels
Non-optimal capacity utilization
Products made to order, flexible
manufacturing
Redesign products/service to
R&D and create benefits to customers
Engineering Strong product design customers
strategies Emphasize product innovation &
basic research
Fluid hierarchical structure
Organizational Incentive to reward quality
and control
strategies Lean structure not in focus
Budget control not as strict
Functional Strategies
Business class. E.g.- Providing cab service from airport to home as free service
Prices are higher than conventional given the higher value proposition to customer. Margins too are
higher given the value of (V-C)
Advertising to create awareness about differentiated service or products. E.g.- 1-to-1 pitching of
chartered flights to High asset individuals
Differentiated products normally have a niche target segment. E.g.- Vistara advertising features to
business class and high earning
High number of trips per flight not focussed, Airport turnaround time not a metric
Brand image to create Top of mind awareness, and word of mouth E.g.- Kingfisher calendar
Flight attended taught each and every aspect of service, communicating, serving, food, dressing to have a
uniform superior quality across flights
Some seats are left empty instead of giving discounts to avoid brand dilution E.g.- Business Class
In-flight special requests entertained regarding food even for single customer
E.g.- Comfortable seats, extra leg room, ambient lighting, in-flight music and movies
Products are created keeping in mind consumer behaviour
Employees instructed to given utmost importance to customer experience. Hierarchy set in place to
allow free flow of ideas from bottom of hierarchy staff. Freedom to experiment.
Free flow of ideas and suggestions. E.g.- Meetings to pitch ideas, groups formed to solve problems
E.g.-Employee benefits for 100% 5-star ratings from customers, neat and clean seats, on time departure
and arrival of flights, food quality similar to 5-star hotel
Extra resources might be consumed but product/service perfection of utmost importance
E.g.- Food at low temperature might not be served
Special funds allocated to make sure customer service is not hampered. E.g.- Giving hotel booking to
delayed flight passengers, high-class training and retraining of staff