MASTER OF BUSINESS ADMINISTRATION AWARDED BY NOTTINGHAM TRENT UNIVERSITY

ASSIGNMENT SUBMISSION FORM

Note: Students must attach this page to the front of the assignment before uploading to WECSERF. For uploading instructions please see the help file online Name of Student: Zubair Saleem Student Registration Number: KL102047 Module Name: Contemporary Issues In Strategic Marketing Module Number: WEC-MBA-10-0506 Assignment Title: Strategic review of Marketing Plan and Repositioning of Airline Industry Submission Due Date: 01 November, 2009 Students Electronic Signature: Zubair Saleem

Plagiarism is to be treated seriously. Students caught plagiarizing, can be expelled from the programme

Assignment Form MBA Jan04

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EXECUTIVE SUMMARY This piece of work broadly demonstrates the Marketing Planning concepts of the new era with the review of in exorable forces to shape the airline industry with demand of the growing markets and innovations in trends and ICT.

This report include the critical review on the past and current literature of the marketing concepts where Market segmentation theories were seemed to be completely changed than the previous one, Targeting was more focused to the customer demands and positioning of the industries was now completely dreamed to follow customer satisfaction and responsiveness rather than. Under the sections of critical literature it was tried to evaluate the best possible results and theoretical as well practical situation through the Pros and cons, dangers and mistakes happened in practical situations.

After having the critical review of marketing concepts, we reviewed the current trends of the region where our selected industry (Pakistan International Airlines) is based and have flying routes with overall review of all PESTLE factors regarding our industry and the current situations in the region. And was followed by the overall performance review of PIA looking on the new trends and growth in market and Marketing Mix factors to study is more deeply regarding its current marketing decisions.

Key issues later on shown the more clear picture of the industry from internal and some external factors by the conduct of SWOT analysis of PIA.

After having the brief study the Marketing objectives were selected for its next year performance followed by its marketing strategies in each factor of marketing mix. Which leaded us to make an action Plan to execute these marketing strategies successfully and control limits were given to ensure the success of action plan

While being proactive a contingency plan was given to secure the future risk followed by the conclusion of our report.
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CONTENTS

Executive Summary-----------------------------------------------------------------------------------1.0 Critical Literature Review of Marketing Concepts--------------------------------------1.1 Market Segmentation-------------------------------------------------------------------1.2 Market Targeting------------------------------------------------------------------------1.3 Brand Positioning------------------------------------------------------------------------

02 04 04 07 10

1.4 Marketing Mix----------------------------------------------------------------------------- 12 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 Current Situation and Trends ---------------------------------------------------------------- 15 Performance Review of PIA----------------------------------------------------------------19

Key Issues in PIA------------------------------------------------------------------------------ 24 Objectives of the firm------------------------------------------------------------------------Marketing Strategies of PIA----------------------------------------------------------------Marketing Action Plan of PIA--------------------------------------------------------------26 29 32

Controls of Action Plan----------------------------------------------------------------------- 35 Contingency Plan of PIA--------------------------------------------------------------------Conclusions-----------------------------------------------------------------------------------References-------------------------------------------------------------------------------------37 39 40 42 43 44 45

Appendix 1---------------------------------------------------------------------------------------------Appendix 2---------------------------------------------------------------------------------------------Appendix 3---------------------------------------------------------------------------------------------Appendix 4 (Company Introduction)----------------------------------------------------------------

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1.0 CRITICAL LITERATURE REVIEW OF MARKETING CONCEPTS Marketing decisions always focus the following main areas and concepts whether in corporate/traditional marketing, entrepreneurial marketing or marketing in new economy. 1.1 MARKET SEGMENTATION Market segmentation is the subdivision of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix (Mike Easey, 2009)

According to Thomas (2007) segmentation or division of markets or customers can base on different factors like Geographic, Price, Media, Psychographic, Demographic, Lifestyle, Values, Behaviors and many other multi-dimensional divisions of business markets.

But the term Market Segmentation is a much more broad concept and must be measurable, substantial, accessible, differentiable, and actionable which leads us firstly to subdivide and select the portions of market in different segments and then to use the best possible marketing energy to penetrate into the best chosen segments of market. The purpose of segmentation is the concentration of marketing energy and force on the subdivision (or the market segment) to gain a competitive advantage within the segment (Thomas, 2007)

The concept of Market segmentation was initially introduced by Adam Smith who conceptualized it as product differentiation (Securing market shares and generalizing markets) or penetrating to depth of market segments.

Strategies of segmentation and differentiation may be employed simultaneously, but more commonly they are applied in sequence in response to changing market conditions. In one sense, segmentation is a momentary or short-term phenomenon in that effective use of this strategy may lead to more formal recognition of the reality of market segments through redefinition of the

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segments as individual markets. Redefinition may result in a swing back to differentiation (Smith 1956). In 1967 Philip Kotler said, A company needs to identify the market segments it can serve effectively. and redefined three main kinds of market segmentation strategies as below;

Source: As mentioned by Malcolm Wright & Don Esslemont, 1994

In 1991 Kotler again redefined presented the marketing strategies into three main views as given below;

Source: As mentioned by Malcolm Wright & Don Esslemont, 1994

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Market segmentation though is very important and highly focused area for any industry or organization to introduce any product or enter into the market.

The steps of segmentation of any market involves following main steps;

Identify the current and potential customers existing in the market to be segmented.

Identify the unique and distinguished features that may divide the market into segments.

Select those segments which offer higher potential and which will also be amendable to the offerings of firm. Source: As centralized by Subha Rudra, 2009

Pros & Cons of Market Segmentation

The segmentation of Homogeneous market into Heterogeneous segments has some advantages and at the same time some disadvantages for the marketer as given below;

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1.2 TARGETING

Targeting is the second stage of Segmentation, Targeting, positioning (STP) process. After the Markets are being segmented through the Segmentation process, the marketing person will select the particular segment or group of customers to target refers the process of Targeting which is termed as critical point in marketing planning since all the marketing decisions are going to be directed towards the satisfaction of that particular group of customers (Know this LLC, 2009).

A company focuses on the customers and selects their target market segment by keeping in sight different factors like the Gender, Age group, Education Level, Occupation, General household Income, Geographic, Demographic, Lifestyle, Culture, Behaviors and many other factors.

But sometimes in a practical situation the customers have different views and focuses according to different products so the factors to be considered while targeting the segments of market also vary from product to product and industry to industry.

But critically the process of targeting is same for all products as given in the following figure;

Source: http://www.slideshare.net/roymogg/the-online-marketing-mba-from-bizface-how-to-segmentthe-market-presentation

For example an automotive industry always tries to target their market segments on the basis of Gender, Age groups, General Net Income, Lifestyle and behaviors etc of their focused customers like Ferrari always focuses the Male gender of age between 18 to 35 years having high Net
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incomes and Lifestyle conscious customers and produces the fastest cars for this segment at a prestige price.

The targeting of segment or selection of particular group of customers also uses marketing strategies defined by Philip Kotler in 1991 as given below.

Single Product for Single Segment

In this targeting process the marketer selects one product for a single segment looking on the particular needs of that segment and tries to satisfy its needs only known as Target Marketing. Like Mercedez targets Prestige pricing segment, Proton was focusing the Mass market before but with Naza targets the family segment etc.

Source: Targeting from www.scribd.com, 2009 Single Product for All Market Segments In this phase marketer selects one general product for all segments and doesnt focus the particular needs but focuses the general needs of overall market generally known as Mass marketing, like all customers drink water, all need food, all need to build the house etc.

Source: Targeting from www.scribd.com, 2009

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Different products for different segments

In this targeting process marketer selects single product for each segment and provides a variety of products in market which satisfy needs of all selected segments and particular segment is satisfied by particular product.

Source: Targeting from www.scribd.com, 2009

Danger of Targeting

Sometimes during targeting marketer overlook a particular segment of the market and due to this over focusing of one or limited segments, he leaves other segments and that gives an opportunity to the competitor and a competitive advantage which may cause heavy losses for the company.

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1.3 POSITIONING Positioning can be defined as How a product (brand) is positioned in the minds of the consumer with respect to the values with which it is differentially associated or which it owns (Ries & Trout, 1982) For example Giant with tagline Wah! So fresh for less, Tesco with tagline Helping you spend less, and Carrefour with tagline Carrefour cares for you are positioned as the cheap price sellers in global market. While according to Yoram J, 1982 Positioning is the reason for being of the product (brand) that creates a place in the minds of consumers that why he should buy the product? and what the place a product occupy in the market. Further he elaborates the positioning as the rank that how does the product is fair against its competitors for consumer in various evaluative dimensions, his behaviors and mental attitude that what are cognitive, affective and action tendencies of consumer towards the product.

Positioning or brand positioning of a company or product basically is set by the organization on the basis of many multidimensional factors that how a company wants to see its products in the minds of its consumers like a promise of company, a need of life, pricing attractiveness on the basis of mental capabilities of the consumers, competitors in the market, cultural values of consumers etc.

A consumer mind is felt to be information oriented and wants to know what you are offering, how it is more effective than your competitors, and how the product is need of their life. Also the perceptual mapping of consumer mind is seemed to be very important while positioning the product.

For example in the consumer mind the perceptual mapping can be as given in following figure;

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Source: Self Made

Like the above figure is for only two main factors of price and services provided by the airlines which can be for many of other factors like food is hygienic or not, ecological, environmental, global, cultural and many other factors.

While successful Positioning of the brand name relies on some main factors like consistency, clarity, competitiveness and credibility.

If these four factors are not considered carefully company can lose customers and this happens when some major marketer makes some mistakes as defined by Philip Kotler (2001) in his book as given below;

Confused Positioning
Too Complicates No consistency

Doubtful Positioning
Low Credibility

Over Positioning Low Clarity Too narrow brand image

Under Positioning No competitive edge No clear benefits shown to customer

Source: Philip Kotler, 2001, Marketing Management (12th Edition)

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1.4 MARKETING MIX Marketing being a very important factor and one of major reason for the success of companys strategies have always been in discussion and is always critically cited by the business entrepreneurs. It seems to be different focuses of different philosophers and practitioners of the concept of marketing. McCarthy (1964) and Philip Kotler (2001) describes four Ps of marketing mix as Product, Price, Place and Promotion giving a Corporate/traditional concept of marketing mix, Zontanos & Anderson (2004) introduce the four Ps as Person, Process, Purpose and Practices as an entrepreneurial marketing mix concepts while Robinson (1991) gives four Cs marketing mix i.e. Customers, competitors, Capabilities, and company. Where as Bennet (2000) describes five Vs as Value, Viability, Volume, Variety and Virtue to focus while setting marketing strategies and decisions. Though many of the philosophers reject todays Marketing Mix like McKenna (1991) says iy does not contain major concepts of adaptability, flexibility and responsiveness. But today the major components of Marketing Mix are followed from the Philip Kotlers view of Product, Price, Place and Promotions for the physical Products and for services three additional factors given by Boom & Bitner (1981) i.e. People, Processes and Physical evidences are termed to focus while analyzing and setting marketing decisions. Considering Kotlers view of Marketing Mix following is description of its major components.

Product

Product in terms of marketing is combination of all goods and services which are provided to the market/customers as a package. E.g. Pizza as a product of Pizza Hut includes all the beverages, time value of money, sales and home delivery services. Though Pizza is a service and not the product but in marketing mix it is referred as service products For service like CIMB bank, Olympia College and any Malaysian airlines.
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In terms of production concept product is a physical product while in terms of selling concept product include other services which by alone will be termed as service products according to Philip Kotler and Armstrong, 2004.

In marketing decisions product is viewed from some of its major factors as given below.

Design of Product Style of Product Branding of Product Quality of Product

Packaging of Product Variety of Product Safety of Product Life of Product

Pricing Pricing is normally viewed from two key players perspectives of market. In which first comes the seller perspective by which a marketer set the pricing strategy to earn profits for organization at highest possible extent. While the second perspective is Buyers perspective in which a marketer always view two main issues of Perceived value and price sensitivity.

The pricing strategies used by the companies for their marketing mix are as given below;

1. Penetration Pricing Strategy 2. Skimming Pricing Strategy 3. Expansionist Pricing Strategy 4. Prestige Pricing Strategy 5. Pre-emptive Pricing Strategy 6. Extinction Pricing Strategy.

These pricing strategies are carried out in two categories i.e. Cost oriented pricing which is done in terms of mark up, targeted return on investment (ROI) and early cash recovery. While another is market oriented pricing which is based on perceived value pricing and going rate pricing.
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Place

Placement of a company involves all the number of activities that make the product available to the customer. (Philip Kotler, 2004)

The distribution of products is always based on Marketing channels and Physical channels. Where marketing channels is termed to be an arranged system in which products move from the production to the end user, while physical channels is termed as the co-ordination of flow of products and offers to the members of channels and ensure the availability of adequate quantity of goods and services to each of the channel.

Promotions

Promotions is one of the major decision of the organizations which is termed to be responsible of sales and profitability of the company. It is basically termed as the communication of the company to its current and potential customers regarding its company and product features and benefits.

Pricing can also be referred as Integrated marketing communication (IMC) technique to send one consistent and viable message to all channels of the company to have a better impact.

In promotion organizations follow different strategies based on the current situation of product and achievement of competing edge in the market. These promotions are categorized into five categories i.e. Sales promotion, Personal selling, Advertising campaign and Public relations.

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2.0 CURRENT SITUATION AND TRENDS

The current situations and trends whether global or in the local market can generally be defined and classified by Economic conditions, Demographic Trends, Socio-cultural trends, technological trends and political/legal trends of the region.

But concerning more to the marketing issues we elaborate and evaluate the situations and trends of PIA by using some of very well known management technical models as given below;

PEST Analysis

Originally designed as a business environmental scan, the PEST analysis is an analysis of the external/macro environment (Big picture) in which a business operates. Political, Economical, Socio-cultural, Technological, Legal and environmental are the often factors which are beyond the control of a business, however are important to be aware of when doing product development, business or strategy planning. (RapidIB, 2009)

Political Factors

Pakistan international airline is 87% owned by the government of Pakistan and in this situation political situation of Pakistan has a great influence on the industry.

Most important factor to discuss in this regards is political instability which has very weird culture in Pakistan regarding the issues, bankruptcies, and fraud issues raised by the next government. Which effect a lot to national interests and industrial losses of PIA.

As the industry is mainly owned by the government and generates revenue of 48% from the total revenue of airline industries so the investments opportunities are always high and have political and legal support by the government.

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Economical Factors According to Central Intelligence agency reported in 2009 Pakistans GDP which was maintained from 6 to 8% since 2004 to 2007 was reduced to 2.7% in 2008. This had some contribution of Global economic recession and some because of reduction of investors due to Afghanistan refugees operation, assassination of Benazir Bhutto, Some major Bomb blasts and unstable governmental conditions in the region.

This also had a huge impact on the airline industry but according to PIA, 2008 in the month of November 2008 PIA achieved highest seat utilization of 78.1% except the pilgrimage seats since last 19 years keeping beyond the facts of afraid people and business organizations who were running out because of Suicide bomb attack in police headquarters in Islamabad (Capital of Pakistan), US missile attacks twice on October 9, 2008. (Wikipedia, 2008)

This can also be evaluated from the reports of Central Intelligence Agency (CIA) in which they report the unemployment rate increased from 5.6% to 7.4% and the inflation rates increased from 7.6% to 20.3% in the end of year 2008 as compared with year 2007 figures.

Also CIA highlights that the oil consumption of Pakistan was 345,000 bbl/day in 2006 while until 2007 the oil production was 68,670 bbl/day and Pakistan was importing 290,600 bbl/day in 2005.

These economic factors of global economic crises, governmental influence in economic decisions, reduction in GDP %, increased unemployment and inflation rates and high imports of oil in case of increased oil prices shows that PIA has to be very much conscious and proactive before it faces economic meltdown.

Socio-Cultural Factors

Islamic Republic of Pakistan is a country with 95% of Muslim population which has religious occasion of pilgrimage and each year more than 150,000 Pakistani nationals go for pilgrimage.
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The number of Haji is 159,647 as approved by the Saudi government and cited by Ministry of religious affairs, Pakistan. This whole number of people going for pilgrimage can only chose Pakistan international airlines as per government policies.

The main industrial sectors of Pakistan are in two main regions of Sindh and Punjab and most of businessmen were flying within Pakistan by PIA but now their focus has been changed and they mostly prefer budget airlines of AIR-BLUE, and SHAHEEN AIR but these budget airlines still dont have landing rights in almost half of the local airports therefore PIA still have quite number of passengers for the local markets.

Another supporting social factor for our industry is the number of Pakistani nationals living abbraod as estimated officially by Overseas Pakistani Foundation is 3 million while unofficial sources on Wikipedia estimates it more than 7 million who travel/live abroad.

Technological Factors

PIA has always tried to improve its technological competitive advantages fleets, services reservation and booking systems (e-booking) for customer satisfaction and competing with the global airline industries as per latest technological innovations.

According to analysis of Zubair Naikzad (2008) PIA had 43 fleets of different categories as classified in the following figure which are tried to be maintained with latest viable technology.

Source: http://www.scribd.com/doc/13082388/Presentation-PIA
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In some other technological factors PIA has flight entertainment systems, auto check in counters, e-ticketing and some other systems which are continuously being enhanced and improved by the organization as per best possible technological innovations.

Legal Factors

Being a government owned company PIA has not much threat of legal issues and have legal landing rights on the entire domestic airports as a national airline. i.e.

While due to less fleets PIA does not cover all international countries but has landing rights to 20 other countries of Saudi Arabia, Bahrain, Kuwait, Qatar, UAE, Malaysia, Thailand, Canada, USA, Denmark, France, Italy, Netherland, Norway, Russia, Spain, Turkey, and United Kingdom.

Environmental Factors

The ecological conditions of PIA fleets is in better condition but still need to be improved as per customer complaints while food is hygienic as per PIA reports and customer feedbacks.

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3.0 PERFORMANCE REVIEW Pakistan International Airline (Born with birth of Pakistan on 10th January, 1955 under PIAC ordinance, 1955) is 16th largest airline in Asia is covering 19 major destinations of the world. PIA is 87% government owned while 13% by other shareholders.

According to Shahmeen, 2009 PIA carries 75% of domestic passengers while the transport sector of Pakistan accounts 10.5 of countrys GDP while 27.5% of Gross Fixed Capital Formation (GFCP) in FY06 providing 6% of countrys total employment. PIA A national flag carrier started its growth by leasing the Boeing 707 from Panam in 1960 and became first airline to fly with Boeing 777-200LR, Boeing 777-200ER, and Boeing 777300ER all together as an achievement.

PIA Investment Limited (PIAIL) as 99% holdings of Pakistan International Airlines owns Roosevelt Hotel in New York, Scribe Hotel in Paris and Sky Rooms 100% owned subsidiary of Pakistan International Airlines.

PIAIL reports revenue of $21.3 million while PIA reports net revenue of PKR 19.7 billion with the net loss of PKR 12.60 billion with the taxation of 0.5% of revenue under minimum taxation Finance Act, 2009 according to the quarterly reported Balance sheet for the financial year 2009. While the report addresses Government of Pakistan as a majority share holder has committed to ensure the going concern status of the group at all the times.

After having this thorough review of the industry and with the Marketing concern of our report now we will look at all 7 Ps of PIA as a servicing corporation as classified thoroughly on the basis of what to focus as in the following figure and reviewed briefly later on.

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Source: http://srmark.com/What-is-IMS.html

Product The core product of PIA is passengers transportation while other associated products include Cargo, Couriers (PIA Speedex) and Charters.

During the review of customer feedbacks on SKYTRAX, some practical works and PIA website we evaluated that PIA products/services and packages include three categories of passenger classes i.e. Business Class, Economy Plus class, and Economy Class while the services vary class to class and in domestic and international routes.

The services mainly include comfortable and customized seats designed in Italy and Switzerland with enough space in all classes, adequate meals, adequate soft drinks (Alcohol is allowed on
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your own), personal screens for audio and video media with limited movies and songs (Some in English others in Urdu/Hindi), Air sickness bag, Emergency landing parachutes, leg room, Clean cabins and toilets, Trained but not too professional crew (With a basic English understanding), 40 kg/pax allowance on international flights, online reservations, e-ticketing, IATA operation safety audit standardized and IOSA benchmarked safety with AIG insurance for local travelers.

These services in all classes are same but intensity and efficiency of some services vary from class to class and from domestic to international flights like in domestic flights meal is provided only on routes more than 1 hour, Alcohol is not allowed as a Muslim country, 20 kg/pax baggage is allowed etc. While PIA is still having financial burdens because of its old fleets.

Price

PIA is following Penetration pricing strategy on the basis of its potential customers, brand position in the market and trends in the market.

In domestic market the prices of PIA are higher than its competitors while in international market its much less than other international airlines like Malaysian airlines, British airlines ets. While due to less prices customers have an adverse effect on its brand.

But pricing strategy of PIA is mainly affected because of government ownership and seasonal implementation of government decisions in its pricing. Like in pilgrimage season November 2009 Company will have to fly at no profit no loss basis because of government privilege to the Hajis.

For army personnel will have to pay 50% of the price as per government rules and regulations while for PIA employees it provides free/rebated tickets.

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Place (Distribution)

PIA follows different channels to provide facility to its customers to reach its seats reservation, cargo services, courier, and charter services.

The main channels of distribution include traditional based and electronic channels of different Travel agents, offices through out the world, and electronic e-reservations.

Travel agents serves for PIA on commission based and include General sales agents (9% commission), IATA agents (9%), and Domestic sales agents (5%), while for cargo and courier services contains international and domestic agents.

Promotions

PIA offers special offers to the domestic market of less prices and increased services to pilgrimage people, free gifts are provided in almost all international routes and to pilgrimage people seasonally.

Its advertising and direct marketing online has an impact but since years they have not been covering the local media to market its products and services. In international cities also they dont have a better advertising and marketing strategies as a result of their traditional product based strategies.

Process

Starting from the first enquiry about the flight timings and air fare package to the collection of the baggage from destination is the complete PIA travel process. Unfortunately, the PIA struggles most in this aspect of the mix and the same factor has contributed most in the deteriorating the positioning.

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People

An important part of any service provision is the use of appropriate staff and people. They are visible and their presence makes it confirm that the service is there. Their interactive property makes them the factor that may simply consolidate the customers perception. Same like process, PIA has also struggled in this aspect.

Physical Evidence: PIA, the biggest airline of the country has its presence in all major cities of Pakistan as well as internationally. With a fleet of 43 aircrafts, airline has got enough leverage to support its portfolio and has given a wide room to the management to design a competitive and effective strategy.

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4.0 KEY ISSUES

After having the review of external factors (big picture) and current marketing mix of PIA, now we will be reviewing the Key issues which PIA have and some external factors which may either increase or decrease the efficiency of PIA. To have review of these issues we will be using SWOT analysis for companys current availabilities of strategies and future capability of growing the market shares.

SWOT ANALYSIS OF PIA

SWOT of PIA has been figured out and discussed below;

Hub at main airport. Technology Innovation Leading Position Operating Structure Strengths Weaknesses

Government involvement. High Trade Debt Dependence on Pessenger Revenue.

Opportunities

Threats Increased interest rates. Accidents. Increase in Oil Prices.

Growth demand in low fair. Customers' loyalty. Industrial Recovery. Source: Self made Strengths

PIA has a competitive advantage as government owned company, that its main hub is at Jinnah International Airport in Karachi which is largest international gateway to Asia for Pakistan and have heaviest traffic level.
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PIA incorporates the latest technology time to time as per innovations like self check in system and e-ticketing etc which give PIA a competing edge.

PIA having 65% of the market shares in domestic routes and 48% on the international routes which move in to Pakistan is a leading airline industry of Pakistan from domestic as well international point of view.

PIA having superior operating structure based on its low cost fairs, high assets utilization, employees efficiency and technological innovations with its Boeing and Airbus aircrafts to carry highest number of passengers on domestic and international routes.

Weaknesses

According to the results of 2007, PIA generated 87% of its total revenue from Passenger revenue. While only 13% was generated from its subsidiary and 100% owned hotels, Cargo services and charters while increase in this share of their revenue can cover their fuel and other costs.

As per Balance sheet of PIA given in Appendix 2, PIA is holding a very huge amount of trade debt which company can circulate and generate profits on a very short period basis as trade debt is used for recent liabilities company have to pay soon. PIA being 87% government owned company is always termed to be liable of Government policies because of which company is always facing losses since many years.

Opportunities

Though PIA is following low pricing strategy but still the prices are high from other local airlines which must be focused as a growing demand of market. With increased facilities and motivation PIA can increase its customers loyalty to increase their repeat travels which is low as per the SKYTREX survey feedbacks.
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According to market analysts global airline industry will experience upturn in the next few years due to global movement of industries and PIA can avail this opportunity by increasing demand.

Threats

According to CIA, the inflation rate is increased up to 20% from 7.6% and this may increase more which becomes a threat of PIA because State Bank in past years is increasing interest rates to cover the national interests.

Accidental situations can impact on the brand name of PIA which will result decreasing revenue.

Due to a number of reasons and confused situations the airline industry is facing up and downs and even domestic terrorist issues can cause fall in the business travelers who are the key focus of PIA to generate revenue.

In recent industry many of airline industries have faced the cases of bankruptcies because of increasing oil prices and PIA also have this threat because already it is having losses each year and increased prices will shift the customer focus.

5.0 OBJECTIVES FOR PIA

Before we go for the formulation of new objectives of PIA to sustain and compete in the new era, we must have to review its current objectives which are given in Appendix 3.

After having review of general goals of PIA which were set in 1956 which still have not been changes as PIA goal refers to be a national flag carrier with priorities of national interests and being incorporated to the government rules.

From our review on industry performance of PIA, global trends, turbulent market trends, we have concluded that PIA is seemed to be unsuccessful in achieving its financial goals and brand image with less customer responsiveness.
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To sustain and compete in the domestic and international markets of new era and looking on the research made we have set the following objectives for the industry for the year 2010 along with its past objectives of achieving national, social, and financial goals.

Objective # 1 By 2010, PIA will buy 2 new Boeing aircrafts to provide a competing edge to the company in provision of best technology to its valuable customers

The objective is being set according to bad response from the customers in STARTEX survey and because of losses of the company.

This will help company to improve its efficiency, satisfy its customers, cover the increasing demands as per market analysts prediction and to remove the old fleets from the organization as a technological innovation.

Objective # 2 PIA will increase its Passenger numbers by 10% till the end of 2010 by advertising, providing best facilities to its current customers and using Customer Relationship Management to achieve its long terms goals

Due to financial losses and customer feedbacks PIA has felt its brand image as not working as per goals of the organization and due to which repeat fairs by the customers is affected, Also due to unavailability of CRM company is unable to decide the customers increasing demands. With the use of these and increased facilities company intend to increase its sales in business and international seats.

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Objective # 3 By the end of March 2010, PIA will start its flights to 2 new destinations of South Africa and Singapore

With the increased fleets PIA will be able to cover more destinations and these destinations are being set on the basis of current market needs and customer focus to these destinations which will increase demands of PIA fleets and will help to increase number of travelers.

Objective # 4 By start of April 2010, PIA will reposition its brand from being a low pricing airline to best facility provider and for that will launch its advertising campaign which will include 3 domestic Television channels i.e. PTV, GEO and KTN while the newspapers to include mainly DAWN, KAWISH, DAILY TIMES and JUNG

It has been felt by the industry that due to a huge gap in advertising, customers are having negative effects for the industry which affects its brand and to reposition our brand this advertising will be launched to give a punch on the customer mind.

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6.0 MARKETING STRATEGY FOR PIA

Considering the global trends, market growth, continuously innovative technology, increasing customer demands and requirements PIA must change its Marketing strategies to sustain and compete in the domestic and international market.

On the basis of required marketing strategies of the new era, statistical data reviewed in the report, current trends of PIA and its current marketing mix, we have proposed the following marketing strategies for each factor of marketing mix to improve the performance of PIA.

As it is proposed marketing mix so we will act as the analyst and will give suggestions in this section.

Product

Looking on the reduced brand image of PIA, it must start an advertising campaign through domestic media as well international media as well through internet.

For the improvement of Quality in its services, PIA must go for variety in its food, entertainment, and other in house facilities to retain current customers and must improve its website with easy reservation with increase in facilities in its package to attract new customers.

PIA must focus on its secondary services of Cargo and charters and improve its shipping facilities to attract new customers and increase in sales.

Price

Current trends show that PIA is already in losses and currently following low price strategies which is also demand of current market, so it must not go for reduction in prices but should make people feel that they pay for what they need.

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But as we have analyzed that the seats accommodation of PIA is not more than 75% which gives an opportunity to focus on long term goals and reduce the price to grab major share of market and accommodate 100% passengers with increased utilization.

Place

As PIA is working since the independence of Pakistan, it has covered its distribution network to the high extent within domestic market but still PIA has some gaps in its e-business.

To improve this PIA must not only focus on its own website but must give its links on globally scrolled websites like Google.com and Youtube.com along with its low prices, and facilities advertisements.

Promotions

PIA have lack of advertisements and sales promotions as per data reviewed, therefore it must go for advertisement campaigns and sales promotions.

As we discussed in its 2010 objectives advertisement campaign will focus the local as well international media and internet while PIA must not only think about promotions for the customers but for its distribution channels and must give them a charm by launching policy of some free seats on a number of seats reservations from one agent. Like if they sale 100 seats 1 seat will be given free etc.

Also it must launch some trade and visitor fairs promotions like Five days stay in Malaysia with return ticket only in 42000 which must be set for those seats which are analyzed to be empty on each fair of PIA to that country.

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Process

PIA becomes liable to provide the best possible services to its customers have already added the innovated ideas of automated check in systems and e-ticketing in its process while still it seems to be less customer response to the airline.

To improve the process PIA intends to announce the pick and drop facility to its valuable customers to have an improved impact on its process and to achieve customer satisfaction.

People

As per our review it was evaluated that PIA employees are well trained but it proved less than customer needs therefore PIA intend to provide the training and development facility to its employees in order to achieve the best expertise to satisfy customer as a competitive advantage.

Physical Evidence

To increase the efficiency of the industry PIA will buy two new Boeing aircrafts to prove a physical evidence to its customers to rely on PIA and to remove the thought of still flying with old aircrafts.

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7.0 ACTION PLAN

To ensure the success of our proposed marketing mix and to plan the actions of organization to attain its objectives we have proposed the following action plan.

Our Proposed action plan to gain attain our proposed marketing strategies will follow five major steps as given in following figure and discussed below.

1. Team Building/ Leadership 2. Customer Relationship Management & Improvements 3. Advertising Campaign and Branding 4. Corrective Actions 5. Following New Market

Source: Self Made

1. Team Building/Leadership

Before starting any thing and as the first session PIA will select three teams which will be working on its action plans from the best expertise of the related departments. And will provide them powers to avoid any resistance in their actions.

One team will be leading the plan while others will be reviewing the performance of the leading team as well of the action plan.

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2. CRM & Improvements

PIA though is flying on the domestic and international routes but its customers response is not good for its brand improvement.

Customer Relationships Management will help the company to provide the data/information of its new plans and strategies of improving facilities which will have an attractive effect on customer mind and through this company will not only provide information and gather the customer response/feedbacks but this will also help PIA to reposition its brand image as best services provider airline industry.

Through the data collected by CRM, company will chose the best possible services and will not only improve its products/services but will also remove gaps between customers to PIA with the limitations of time and company intend to start this by start of February 2010 and will continue till PIA achieve its objectives.

3. Advertising Campaign and Branding

Once PIA will complete its customer assessment through CRM and improvement of its products/services during second session, it will introduce its improved products/services to its domestic as well international customers through an advertising campaign to reposition its brand in customer minds.

As per objectives of PIA for 2010, PIA will buy 2 new Boeing aircrafts by the end of march and that will also support to build its brand and customers will have feelings that PIA has improved its services and is responding to the customers.

This session will be started from start of April, 2010 and will end at June, 2010 as the main campaign while advertising will not stop and PIA will advertise its improved services and brand building/maintenance time to time.

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4. Corrective Actions

CRM might not reach to the overall segment of the market and this may cause reduced resources of information collected during section 2 but once the products and services are advertised with an invitation of taking part in continuous CRM, some other data will be in hands with response of large segment and after advertising is done PIA will take its final corrective actions.

This will improve its products/services with the highest competing edge and will cause the provision of more perfect products/services as per capabilities of PIA to its valuable customers.

PIA will ensure that before it goes for the new destinations as per its objectives, all the corrective actions and repositioning must be completed by the end this session which will start July, 2010 and must end till September 2010.

5. Following the New Market

By the end of September PIA will fly to the destinations as per its objectives with an improved environment with repositioned brand, continuous CRM and better facilities to the customers as per new thoughts of customers.

Now as a new brand PIA will be known as responsive to the customers, best facilities provider and will start to compete with a new competing edge of its new brand.

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8.0 CONTROLS OF ACTION PLAN

Our controls will include four major steps

1. Communication and Motivation

2. Weakly Meetings

3. Performance Auditing & CRM

4. Accountibility & Reporting Source: Self made

1. Communication and Motivation

Human resource management is always felt to be the main issue in failures of organization strategies and plans. To avoid this risk and to build the confidence of employees PIA intend to motivate its employees and it will be the responsibility of the leading team to communicate to all levels of employees for provision of information and taking their suggestions as a source of innovations.

This will continuously help the leading team to take better actions and will build an environment of learning organization within PIA which will be helpful not only within the action plan but will provide a competitive advantage to the organization of committed and trained workforce in new challenges.

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2. Weekly Meetings

Weekly meetings will be arranged within all levels of management and with the leading team to discuss and remove the gaps from the plans and to execute it more efficiently.

This will help to take corrective actions continuously through out the action plan and will help to have the highest possible benefits from the action plan.

3. Performance Auditing

Through performance audits PIA will continuously assess the capacity and capability of the leading team as well their improvements in the system.

PIA is going to take a big step and its future conditions will be based on this action plan and it can not only base on the leading team so the secondary teams will be reviewing and auditing the performance of the leading team and performance of the action plan in order to avoid any mistake and loss.

4. Accountability And Reporting

Through out the execution of the action plan, all three teams will be checking each others performance as a cross function and this accountability will not only be based on the steps and on piece of paper but will be termed to be seen in the reflection of customer responses.

While these accountability reports will be submitted to the corporate management on quarter monthly basis to focus more efficiently and for the higher decisions and suggestions to the action teams while will ensure the success of the plan.

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9.0 CONTINGENCY PLAN

The practical situations can change their situation and condition any time due to many affecting factor like local governmental and national conditions, changing environmental conditions, innovations in trends, new trends in customers, high competition rate and international economic conditions and because of these conditions our proposed action plan for PIA can have a fall or failure.

In the situation of failure of our plan PIA will intend to follow the following contingency plan which will not be used as a whole to terminate the first plan but during each section of our plan if the things went wrong, we will follow the following contingency actions.

1.

During Team Building

During this session, which is completely dependent on the availability of required expertise and motivation of employees to participate in our new brand positioning while if we do not find the required expertise then expertise will be hired from outside the organization and if the employees will not respond to the needs of industry, we will announce awarding system on better performance in employee participation to achieve our goals.

2.

CRM and Improvements

From the past experimentation it is believed that CRM is never failed if it is executed in its required manner, PIA will launch its CRM with its business website and will also follow traditional ways and will improve its services as per customer needs while if this fails to give adequate results then PIA will launch a home to home program in which our teams will go to main cities of Pakistan that are also destinations of Pakistan and will get the feedbacks by hand which will require the time and then this section will be stretched for 15 more days and the next sessions will be tried to contract.

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3.

Advertising Campaign & Branding

PIAs advertising campaign will be launched through paper as well electronic media while on less response and feel of lack achievement of brand position in customers PIA will launch some awarding ceremonies for the best national services in the country and will also issue the Customer loyalty cards as a first move in Pakistani airlines like the Saudi airline gives for relaxation of weight on the loyalty basis.

4.

Corrective Action

In this section the corporate management will be following the corrective actions made by the leading team while if corporate management feel that employees doesnt response to the new and improved services then corporate management will involve itself to motivate the employees and in case of failure of this session management will include one more section of Benchmarking with the successful airlines to increase the efficiency of this section.

5.

Going with the New Market

In case of any lack or failure in the end results PIA will extend its flight schedules for the new destination and will try to evaluate the plan and will take corrective action again and will launch the flights with highest possible efficiency.

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10.0 CONCLUSION

Pakistan International airline as the largest airline industry of Pakistan, 87% government owned, first non-communist airline fly to China and with improved reservation and ticketing system has a lot of opportunities to grow its business and market shares.

Due to economic instability of the region, government involvement in its decision making processes, recent economic meltdown and many other factors have resulted losses for PIA since many years which reach to $12.60 billions in financial year 2009.

Under these circumstances and on the basis of the trends of new era, ICT innovations, dangerous societal conditions, negative customer response and some other global factors, we evaluated that PIA must reposition its brand in domestic as well in international market.

PIA flies at higher prices within the country while internationally its prices are comparatively low except some airlines like Saudi Air and Iran Air that have competitive advantage of least oil prices due to their oil reserves.

It was concluded that PIA is flying with seats utilization of 75 to 80% which is a weakness but PIA can use it as its strength to fill its seats and offer reduction in prices and also can launch some tourism programs for different tourist destination like Malaysia, Singapore, Thailand etc.

Advertising campaign and improvement in services were thought to be the best future decision to cover its losses as a long term policy and some packages on its cargo services will also reflect the growth of industry and coverage of its expenditure in future.

The action plan for the achievement of PIA marketing strategies followed by its objectives will lead the industry to achieve the new trends of the market and to increase its efficiency and customer responsiveness with increased market shares, while CRM was termed to be one best technique for PIA to achieve its goals.

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11.0 REFERENCES

Jerry W. Thomas (2007), Market Segmentation, Journal by Decision Analyst, Inc.

Smith (1956). Product differentiation and market segmentation as alternative marketing strategies. Journal of Marketing, 20, 3-8.

Anthony R.Bennett, 2000, The five Vs-A buyers perspective of Marketing (A research paper): MCB University Press.

Philip Kotler, 1967, Marketing Management (1st Edition). Englewood Cliffs, New Jersey: Prentice-Hall.

Philip Kotler, 2001, Marketing Management (12th Edition), Englewood cliffs: Prentice Hall.

Michael porter, 1980, Competitive Strategy, Free press, New York. Vasantha Kumar N.Bhat, 1993, A Multivariate Analysis of Airline flight delays: MCB University Press.

Ian Fillis, 2009, An Evaluation of Artistic Influences on Marketing Theory and practice: Emerald Group Publishing Limited, UK.

McCarthy, 1964, Basic Marketing, A Managerial Approach, Irwin, Homewood.

Mike Easey (2009), Fashion Marketing, Third Edition, Blackwell Publishing Malcolm Wright & Don Esslemont, 1994, The Logical Limitations of Target Marketing, Article of Marketing Bulletin, P-1.

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Subha Rudra, 2009, Market Segmentation, Presentation, Online, Retrieved on 13th October, 2009 from http://www.scribd.com/doc/17173318/Market-Segmentation-TargetingPositioning-By-Subha-Rudra

Targeting,

2009,

Online,

Retrieved

on

13th

October

2009

from

http://www.scribd.com/doc/11374346/Targeting

Target Marketing, 1998-2009, Know this LLC, Online, Reviewed on 15th October. 2009 from http://www.knowthis.com/principles-of-marketing-tutorials/targeting-markets/

http://www.opf.org.pk/home/investmentconference.html S.R. Mark, Online, Retrieved on 16th October, 2009 from http://srmark.com/What-is-IMS.html

http://www.airlinemeals.net/meals/PIA.html http://www.passengersurveys.com/Airlines/PIAPakistan.htm

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Appendix 1

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Appendix 2

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Appendix 3

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Appendix 4

PIA Introduction

Pakistan International Airline is a national carrier of Pakistan and has been an air travel pioneer since its inception in 1955 with slogans of Come fly with us and Discover the magic of PIA experience. Pakistan International Airlines Corporation, more commonly known as PIA is the flag carrier airline of Pakistan, headquartered in Karachi. It is the 31st largest airline in Asia, operating scheduled services to 23 domestic destinations and 36 international destinations in 25 countries across Asia, Europe and North America. Its main bases are Karachi, Lahore and Islamabad/Rawalpindi. The airline's secondary bases include Peshawar, Faisalabad, Quetta and Multan, from which it connects the metropolitan cities with the main bases, the Middle East and the Far East. The airline is owned by the Government of Pakistan (87%) and other shareholders (13%). PIA is driven by the highest standards of corporate governance and social responsibility. As a public sector organization and a business leader, PIA believes in building strong relationships with customers, partners, employees, and the communities in which it operates. The organization's values are exemplified in a range of corporate initiatives designed to impact positively on the lives of multiple stakeholders.

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