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Background
Emirates (established in 1985), an airline company based in Dubai, is owned wholly by the government of Dubais Investment Corporation. The company is the largest airline in the Middle East, having the capacity to carry roughly 3,650 flights between the Dubai International Airport and more than 80 countries worldwide. Starting in the 1980s, the airline showed tremendous growth in the sphere of international flights, using its capital to introduce new services to the market and acquiring loyal customers over the years. Emirates boasts a large fleet of over 250 planes, including Boeings and Airbuses. The companys investment in innovation and the expansion of its services have made it the most awarded airline in categories such as Best Major Airline (Africa and the Middle East), Best Airline in the World, Best First Class and Best Economy Class (Emirates 2017).
While recognising the variety of topics that could potentially be explored through the example of Emirates, this assignment will focus on the strategy of marketing the company as a service business. Marketing services can be challenging because customers cannot see the benefits of services in contrast to products that they can see or touch. The aim of the current research is to explore the Emirates marketing strategy in the area of international flights, identify its strengths as a service company, apply relevant theories and concepts and make recommendations about the future direction of Emirates.
Characteristics of the Airline Service Industry: UAE
The Middle Eastern airline industry remains the fastest growing in the world, with traffic expanding at a rate of approximately 10% each year (Aviation Investment Summit 2013). As a result of this trend, by 2020, the UAE aviation industry is expected to contribute $53 billion to the countrys economy, providing up to 750,000 jobs, aviation industry said on Sunday at the Future Air transportation Systems Summit (Diaa 2015, para. 1). Thus, the UAE airline industry is continuing to strengthen its position in the international market, competing with such industry giants as China and the United States. Moreover, the current trend towards industrial expansion means that the UAE will need to employ more professionals within a short period of time to address market demands.
In terms of the challenges facing the UAE airline industry, experts have identified several issues that need to be addressed, including infrastructure, human skills, safety, finance and the management of airspaces (Diaa 2015). Therefore, it is critical to the UAE airline industry to solve the identified challenges in order to be prepared for the doubling of air traffic by 2030 and the necessity of handling more than 5,000 aircraft movements a day. A brief overview of the international and UAE-based airline industry showed that commercial airlines in the Middle Eastern region should be prepared for the forecasted growth and the requirement for expansion to address the market needs. Faced with the growing capacity of airlines and increasing demands of customers, companies must develop effective marketing strategies to set their services apart from those offered by the competition.
Service Business Marketing
Theory of Service
The theory of service implies the use of valuable knowledge related to the procedures that should be implemented within the process of producing a service. As a rule, service providers accumulate this knowledge as a consequence of their involvement in activities. Most studies on service theories have been divided into normative and descriptive, differing in the purpose for their application. While descriptive theories of service are associated with the knowledge of present and past experiences in terms of using and producing services without providing advice on best practices, normative theories are linked to general knowledge that can be used for planning further improvements in service provision. In the context of this assignment, a normative approach to service theory will be used in making recommendations about the successful practices of service marketing based on the example of Emirates airlines.
Service Marketing Issues
Selling services has always been challenging because this type of product is not tangible, even though services provide formidable sales to companies, contrasted against products that customers can touch and see before exchanging money for them. This means that benefits from services are not always immediate (Johnson 2018). For service companies to become successful, customers need to show substantial faith that they will get what they want after the service is received. Another marketing challenge associated with service businesses is companies inability to demonstrate that services provided could offer a solution to customers problems. In the context of service businesses, it can be impossible to show before-and-after images in marketing materials, making the task of attracting new customers even more complex (Johnson 2018, para. 3). Service companies need to establish strong relationships with customers in order to understand whether the services have benefited the latter in any way. Also, businesses that sell services are greatly challenged by the marketing people who serve their clients. This means that the quality with which employees perform a given service is paramount to a companys reputation and subsequent success in the field; management needs to pay extra attention to the effectiveness of their human resources to ensure that customers remain satisfied.
To be effective in marketing a service such as airline transportation, it is essential to understand what differentiates a particular company from the competition. However, doing so has become more complicated than ever. Every company that operates within a specific industry has learned how to attract customers by using social media, strong customer relationship programs, social responsibility, price differentiation and other strategies. Thus, nowadays, airlines can attract new customers through employing innovative strategies such as service productising, which implies treating the service they sell as a product (LaPlante-Dube 2017). This can be achieved by implementing such techniques as offering package services for customers to purchase. In the case of Emirates, these types of packages can include different levels of loyalty programs (e.g., Miles with Emirates) that range from affordable to premium in order to offer customers price flexibility. A great advantage of marketing services as products is the possibility for transparency customers can see the price for each service and choose what is appropriate for them while the company that sells such services does not have to compromise on quality.
Marketing Airline Services
Since modern airline companies are growing increasingly creative in the programs and perks that they offer to customers, it is important to invest in setting the companys offerings apart from those of the competition as the company seeks to attract clients who may be overwhelmed with a large selection of services. Successful strategies for marketing airlines include offering perks and bonus programmes, maximising customer contact through online solutions and investing in convenience and customisation (Amadeus Editorial 2013). In terms of offering perks, airline companies need to take an intelligent approach as they update their online content to expand brand awareness and increase search rankings. Special offers, promotions and sales can be advertised online with the help of Google Ads or YouTube commercials, which have become more accessible to modern customers than generic television ads (Amadeus Editorial 2013). Also, an airline service company should review existing loyalty reward programs to identify any elements that can be improved. For example, increasing rewards is recommended during the low season to facilitate sales at a time when they are usually at a low level.
The maximisation of customer contact with online solutions that customers can access wherever and whenever is another recommendation for marketing airline services effectively (Eye for Travel 2016). Such online solutions should include mobile booking services that customers highly value for their convenience and ease of use. Mobile solutions such as brand-specific applications (e.g., the Emirates App) are effective in personalising communication with customers, enhancing companies marketing efforts, building brand recognition and offering clients simple and easy options for booking flights (Amadeus Editorial 2013). In addition, when developed correctly and coupled with SEO-enriched online content, applications can increase brand exposure and attract new consumers.
Within the normative perspective on the theory of services, businesses need to offer their customers tangible outcomes that will benefit them immediately. Customisation has shown to be among the most important components of effective airline service marketing with regards to the normative perspective because of the trend where customers are becoming more likely to travel in a larger aircraft offering better amenities that most airlines provide. According to research conducted by Liou, Yen and Tzeng (2010), companies need to pay attention to the available mechanisms of enhancing service quality such as the dominance-based rough set approach (DRSA), which helps airlines cut costs while investing in customisation. The researchers also mentioned that the need for customisation arose from market pressures and the differentiated demands of customers when it comes to purchasing services such as airline travel; while some clients prefer flying economy class and saving money, others want lavish premium-class interiors and excellent cuisine. Thus, in-flight customisation is needed not only for heightening passenger experiences but also for strengthening relationships with consumers who value flexibility and convenience in the services that they purchase.
Marketing Services: The Emirates Example
SWOT Analysis
Emirates strengths
The airline is officially managed by the government of the United Arab Emirates, which brings such advantages as being widely represented in the oil-rich Gulf States. Emirates operates hundreds of flights 24/7 and gets tremendous revenues from carrying passengers to international destinations. Customer satisfaction rates with the provided services are usually at a high level (90% and upward), which is crucial for the brands reputation (Emirates 2017).
Emirates weaknesses
The company is currently facing intense competition from competitors such as Qatar, which leads to the limited growth of its market share. The maintenance of the benchmark standard, Emirates has to incur high costs. In addition, the dependence on international traffic makes the airline less successful on the domestic scale.
Opportunities for Emirates
The company has an extensive potential to extend its coverage through the introduction of new airplanes to its fleet as well as enhancing the quality of its services. Attention should be paid to emerging new markets on the international scale. Additional steps should be taken to strengthen customers confidence in the airline through improving communication and service marketing.
Threats of Emirates
The Middle East is covered by other airline companies operating international flights, which is threatening to the company. Fuel price increases can present a challenge because the airline will have to increase ticket prices. Also, possible changes in governmental regulations and policies can hinder both domestic and international operations.
Emirates Segmentation, Targeting, and Brand Positioning
Emirates has based its positioning efforts on psychographic and geographic segmentation strategies in order to appeal to its target audience. Operating throughout hundreds of international destinations, the company targets customers who are willing to spend more on airline services. As a service company, Emirates has a specific customer segment that it targets in order to build its reputation as a reliable airline carrier with loyal passengers. Upon its creation, the airline has positioned itself as a company that targets luxury fliers who would like to experience first-class treatment on board. However, with the changing demands of the international travel market, Emirates had to reevaluate its segmentation and also target more budget flyers. The companys efforts targeted at new positioning strategies have been focused on expanding the range of service and transforming Emirates from a travel brand to a global lifestyle brand (OReilly 2012, para. 2). Wih such an expansion comes to a new target audience of customers who have already traveled the world and want to experience luxury airline services. To engage customers who need some encouragement to try the Emirates experience, the company has invested in a digital activity such as online advertisements on social media.
Despite differentiating its spectrum of customers, Emirates is still maintaining the reputation of a luxury airline. Value-based positioning is considered the core of the companys branding efforts, which makes the company aware of the importance of being favored by customers.
Marketing Emirates Services
The Ansoff Matrix can be applied to the examination of Emirates marketing efforts to determine what strategic option does the business uses: market penetration, product development, market development, or diversification (Figure 1). For Emirates, exploring new markets through diversification and market development is currently ineffective because the company has positioned itself as a luxury air carrier and will need to develop a completely new strategy to target a new customer segment. At the moment, market penetration and product development are the most viable strategic options for Emirates because they do not require the exploration of a new market and will target both existing and new products.
Product Development
With the rising demands for customised services, Emirates has demonstrated that it cares about customer experiences, and continues to invest in innovation that enhances clients perception of travel. Because the success of service marketing has been associated with treating services as if they were products, product development has been chosen as a potential direction for Emirates within the existing market (Wirtz, Chew & Lovelock 2016). Product development through the expansion of customised services is expected to expand Emirates portfolio through service modification. In January 2017, the company reported collaborating with Sabre to develop a merchandising technology that personalises customer experiences to offer clients more informed choices and a higher level of customer service (Sabre 2017, para. 6).
Another step involved in product development is the companys introduction of perks as an essential component of Emirates marketing strategy. The Miles with Emirates programme costs nothing for customers to join while offering abundant opportunities to save money and receive exceptional services on-board. The programme is based on the principle of earning miles, which describes the accumulation of points that customers are awarded when flying with Emirates and its partners. These points can then be redeemed for special rewards and promotions such as discounts on flights or class upgrades. Emirates clients can earn Skywards and Tier Miles that differ in the rewards that they can produce (Emirates 2018). In addition, Emirates has developed an easy-to-use personal account interface that customers can access to monitor their perks and manage their information.
Market Penetration
To penetrate the market of luxury air travel, Emirates has been proactive in establishing a social media presence to connect with customers and offer them more mobile options for booking flights, browsing available services and leaving feedback. It is important to mention that the company has reached a high level in terms of maintaining an online presence and has been recognised as one of the fastest-growing social media brands in the world (Fadi 2017). In addition, the company has invested in developing a specialised application that customers can download to their mobile devices and use whenever necessary. The application allows users to search and book flights, manage their customer profile, check in without the need to queue at airports, change their booking details, get the latest information on flights and more (The Emirates app 2017).
Conclusion and Recommendations
Modern customers require diversification and customisation of in-flight services at various price points. While some passengers are willing to pay for expensive first-class seats, others prefer travelling affordably, and Emirates knows how to satisfy the demands of both customer groups. Regarding the brands online presence, Emirates is active on social media and has developed a mobile application that customers can use whenever and wherever they want. Lastly, Emirates is a great example of how to attract clients with the help of an interesting perks programme; Miles with Emirates is a unique bonus strategy that encourages travellers to choose Emirates and its partners over other companies because of the opportunity to collect redeemable points.
The commercial air travel industry in the Middle East is expected to grow exponentially, making a positive contribution to the economy. Since the UAE is at the centre of Middle Eastern commercial operations, Emirates as a company has full potential to grow further and capture the market of international commercial air transport. Recommendations for the company include building stronger relationships with customers and differentiating its services to cater to budget-conscious clients. While Emirates can boast of its first-class services with such attractions as expensive cuisine, it is important to understand that the demand for affordable travel is increasing due to the opening of new destinations worldwide, which is a new market category outlined in the Ansoff matrix. At the moment, Emirates is not ready to go in the direction of low-cost travel because its aircraft are large and luxurious, which means that it will be cost ineffective to set lower prices.
Reference List
Amadeus Editorial 2013, How airlines can attract more customers, Web.
Ansoff matrix 2017, image.
Aviation Investment Summit 2013, UAE aviation sector.
Diaa, S 2015, UAE aviation industry to contribute $53b by 2020, Gulf News.
Emirates 2017, Customer satisfaction survey Emirates Air Line, Web.
Emirates 2018, Earning miles.
Eye for Travel 2016, Improving the airline experience. How technology is changing customer experiences and communications.
Fadi, H 2017, Emirates airlines and social media marketing, Web.
Johnson, K 2018, Marketing challenges in the service business.
LaPlante-Dube, S 2017, How to market services treat them like a product.
Liou, J, Yen, L & Tzeng, G-H 2010, Using decision rules to achieve mass customisation of airline services, European Journal of Operational Research, vol. 205, no. 3, pp. 680-686.
OReilly, L 2012, Emirates introduces new brand positioning. Web.
Sabre 2017, Sabre helps Emirates to enhance traveller experience using merchandising technology.
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Wirtz, J & Lovelock, C 2016, Essentials of service marketing, 4th edn, Pearson, Harlow, UK.
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