5X7Z0018 Marketing in Practice: American Airlines Case Study Analysis

This case study examines the marketing strategies of Delta, American, and United Airlines in response to increased competition from low-cost European rivals in the transatlantic market. It analyzes the role of marketing in a competitive business context, reviews relevant literature, and identifies key factors through PESTLE, Porter's Five Forces, and SWOT analyses. The study explores the challenges and opportunities for companies entering new markets and recommends specific marketing strategies for the American airlines to maintain their brand value and market share. The analysis highlights the importance of understanding market behavior, customer needs, and competitive dynamics in developing effective marketing policies. Desklib provides access to similar case studies and study tools for students.

MARKETING IN PRACTICE

Table of Contents
Introduction and Background..........................................................................................................2
Role of Marketing in Competitive Business Context......................................................................2
Literature Review............................................................................................................................3
Key Factors in Business Analysis....................................................................................................4
PESTLE ANALYSIS..................................................................................................................4
Porter's five Forces......................................................................................................................6
SWOT Analysis...........................................................................................................................7
Critical Analyses..............................................................................................................................8
Challenges for Companies Entering a New Market....................................................................8
Opportunities for Companies Entering a New Market................................................................8
Recommended Marketing Strategies...............................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................12
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Introduction and Background
Companies with unique marketing policies understand the behaviour of the market and its
customers and are able to produce products and services that can fulfil the needs of the
customers. Effective marketing policy includes distribution promotion pricing and reaching to
the potential customers with uniqueness of the product and services. In today's world, no
business organisation would be able to survive or sustain in the market without proper planning
of effective marketing. Development growth and economic triumph of an entity depends largely
on effective marketing (Armstrong, Adam, Denize and Kotler 2014).
In this study effective marketing strategy of the three big International American carriers named
Delta airlines American airlines and United Airlines will be discussed. These are line Agencies
have earned a huge reputation and brand value in the market over the years as they control 80%
of transatlantic seats. but now the market has become very competitive as some Norwegian and
other airline companies are entering the market providing lowest fare on board experiences to the
customers. The fare provided by these Norwegian airline agencies is 5 times lower than and the
fair provided by International American airline agencies. In the market customers always have a
tendency to switch to other organisation which are providing services at cheapest fare. The sales
of these three big International American careers has been dropped. In this study the learner will
discuss how these three big International American Agencies should adopt proper marketing
strategy in order to maintain the brand value and reputation in the market.
Role of Marketing in Competitive Business Context
Marketing in competitive business is not a part of business activity rather it would be better to
say that marketing is the business. The term marketing includes all types of business activity for
example promotion advertising the product and the process of making the unique product and the
services in order to fulfill the needs of the customers (Gebauer, Saul, Haldimann and Gustafsson
2017). The main role of the process of marketing in competitive business is consumer research
through advertising the products and services to the customers and reaching out to the customers
in order to get the full view of customer’s behavior in the market. Consumer research is the
process to identify the need for a products and services in the market and to monitor the sales
pattern of the similar products closely. Effective marketing policy should focus on reaching out
to those potential customers and making them aware of the new or modified products and
services and making them purchase their offerings. International American airline agencies-
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Delta airlines American airlines and United airlines should focus on the strategic marketing
policy in order to regain their brand value.
Literature Review
According to (Jr et al. 2015), the term marketing includes all types of business activity for
example promotion advertising the product and the process of making the unique product and the
services in order to fulfill the needs of the customers. According to (McDonald and Wilson
2016), the process of marketing includes all kinds of business actions for example planning and
fixing a price and promoting or advertising the products and the services to the customers or to
the potential customers and the distribution process. Marketing is a kind of business action that
delivers to the living standards of a community or a group of population. Many experts have also
given a broader definition of marketing and defining marketing as an art of practice through
which an organization is able to provide the value of goods and services to the customers. Some
experts would argue that the marketing is an effective strategic practice and art of selling the
products to the consumers. According to (Gebauer, Saul, Haldimann and Gustafsson 2017), an
organization undertakes the process of marketing in its business operation in order to create
deliver or communicate with the customers through selling a new or modified product. The
process of marketing is done in order to create a huge customer base and to reach to the potential
customers which ultimately benefit the organization and its shareholders. Companies with unique
marketing policy understands the behavior of the market and its customers and are able to
produce products and services that can fulfill the needs of the customers. In today's world, no
business organization would be able to survive or sustain in the market without proper planning
of effective marketing. Development growth and economic triumph of an entity depends largely
on effective marketing. According to Pearson (2016), the main function of strategic marketing is
to build an awareness of the products and services among the customers and making the
customers more knowledgeable about the merchandise which would ultimately lead to an
increased sale.
In today's world market has become very competitive and same products and services are offered
by many business entities. According to Armstrong, Adam, Denize and Kotler (2014), there are
some basic goals of marketing for example how a product or a service offered by a business
organization is different from the others, what qualities and features of a product or service
makes it superior to those product or services offered by other business organization, why the
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customers would buy a product or service from one business organization and not from the
others. Effective and strategic marketing process would allow an organization to create a huge
customer base making new customers and achieving maximum market share in the process and
also improving customer loyalty and the brand value of the organization.
Key Factors in Business Analysis
There are various business analysis models that help an organisation to understand its
organisational environment and analyse the business strategically and critically (Wheelen,
Hunger, Hoffman and Bamford 2017). In this section, strategic analysis of American airlines will
be discussed through some business analysis framework like PESTLE analysis, porter's five
forces framework and SWOT analysis.
PESTLE ANALYSIS
In order to understand the impact of some external forces on the business of American airlines
pestle analysis is discussed. PESTLE stands for political, economic, social, technological, legal
and environmental forces.
Political
In order to ensure profitability for long term period in airlines market, it is important to address
those political factors that can impact those three big International American carriers. The three
big International American carriers- Delta airlines, American airlines and United Airlines are
operating in more than 15 countries and these organisations are exposed to the political
environment of these countries (Iatrou and Oretti 2016). There are some political factors that
need to be addressed in order to enter into a certain market
 Political stability
 The level of bureaucracy and interference by government
 Taxation and corruption
 Protection for intellectual property
 Pricing Regulations in the service sector
 Wage legislation in employee benefits.
Economic factors
There are various macro environment factors such as foreign exchange rate level of inflation
savings rate etc that affect the business of International American airlines (Hamilton and
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Webster 2015). The economic factors that should be considered by delta airlines American
airlines and United airlines are as follows
 Stability of economic system in the countries of operation
 The level of government intervention in the service sector
 Stability of foreign exchange rate in those countries.
 Skill and competency level of the workforce
 Growth rate of the economy of those countries
 The level of unemployment, inflation and interest rate
Social factors
The culture of the society, social beliefs and attitudes place a significant role in order to
understand the behaviour of the population in a certain market. International American airlines
should analyse the following social factors
 Class and power structure and hierarchy of the society.
 Skill competency and education level in the market.
 Attitudes of the population towards health and environmental consciousness.
Technological factors
the impact of technological factors over transportation industry like airlines industry is huge.
International American airlines shoot consider technological analysis that has following effects
 Technological diffusion rate
 how Technology impacts value chain structure
 How cost structure is affected by why recent technological advancements.
Legal factors
International American airlines should consider some legal factors while entering into a new
market. Those are as follows
 Intellectual property laws like copyright patents etc
 Employment and health protection law (Shaw 2016)
 Data protection
 Laws regarding e-commerce.
Environmental factors
While entering into a new market, International American airline agencies should consider and
analyse the stability of environmental standards in those areas and its surroundings where they
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are going to operate. The environmental factors that affect the business of those American airline
Agencies are
 Climate change
 Attitude of the government towards renewable energy
 Waste management
 Laws and regulation regarding air pollution
Porter's five Forces
in order to understand the competitiveness of the airline markets International American airline
Agencies should analyse porter's five forces framework.
Bargaining power of suppliers
As there are plenty of suppliers that provide service to Delta, American and United airlines, these
suppliers don't have any bargaining power over the business process. This airline agents are in a
position to demand quality service and make this suppliers agree to their own rules. There are
fewer suppliers like Boeing airbus who have some bargaining power for the technological
innovations size of the organisation and financial stability (Moreno-Izquierdo, Ramón-Rodríguez
and Perles-Ribes 2016).
Bargaining power of the customers
Customer loyalty is a key thing to success of any business and in case of airline business, the
bargaining power of the customer is very high as the customers have the tendency to switch to
the alternatives if they are not getting the Quality Services. International American airline
agencies should make some strategy in order to keep their customers happy and stay with them
by giving discounts or by keeping the price as low as possible.
Threats of substitute products
The threats from other substitute products mainly come from other brands. Delta American and
United airlines are competing with other international airline Agencies like British Airways
France airlines etc. But rates from other airline agencies are moderate as these three big
International American carriers have a huge brand name, technological strength and popularity
(Hannigan, Hamilton III and Mudambi 2015).
Threat of new entrants
The threats of new entrants in the airlines market have made it difficult for Delta airlines
American airlines and United airlines. The threat of new entrants is very high nowadays in in
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American international airline market. Some knowledge in airline Agencies are providing loafers
to the customers and customers are switching to those Agencies while travelling.
Competitive rivalry
The level and the intensity of competitive rivalry in international airline market in America is
very high as there are plenty of small and large players in the market who are competing for the
same market share (Holloway 2017).
SWOT Analysis
Strengths
 American international airline Agencies have strong tie ups and Alliance Bass with other
various International Agencies like British Airways Pacific Airways air Berlin etc
(Clopton 2017).
 Extensive operational network secured bye by International American airlines agencies
 These agencies have a huge brand loyalty and on a great reputation for onboard
entertainment.
Weaknesses
 Products and services provided by the suppliers are not as good as it was before which
has made it very difficult for these International American agencies is to provide better
service to the customers (Lovelock and Patterson 2015).
 The number of low fare carriers are steadily growing in the market affecting the revenues
and market share.
Opportunities
 After 2008 economic recession global tourism sectors are growing rapidly on breakneck
pace giving opportunities to American international airline agencies to expand.
 Air freight sectors are growing rapidly in the market giving opportunities to this agency is
to boost its revenue and market share (Laudon and Laudon 2016).
Threats
 The threats of new entrants in the market is high as there are plenty of small and large
carriers providing low fares are growing rapidly.
 Safety concerns is one of the biggest threats in the airline industry.
 The task of complying with the Global rules and regulation regarding environment and
law is hard for these airline agencies (Percival, Schroeder, Miller and Leape 2017).
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Critical Analyses
Challenges for Companies Entering a New Market
Along with the opportunities being created while expanding the airline business into entirely a
new market, it creates new challenges too for the companies. an airline agency cannot make all
the decisions about what to do to grow their business as those decisions are largely affected by
the other organisations and entities.
1. American international airline Agencies need to follow those rules and regulations set by
the government of the countries they are going to operate in. It is important to abide by
those rules and regulation and the air space they are going to use. Airline agencies need
to make compliances with the government it rules and regulations as there are various
entities inside the government who monitor the activity of airline agencies regarding
safety measures, work time etc (Mills, Koliba and Reiss 2018).
2. American international airline carriers like Delta airlines American airlines and United
airlines need to take care of the contracts they have agreed upon with the airport authority
they are going to operate on.
3. Customers point of view should also be taken care of while operating in different
countries. Flight scheduling should be done n a considering customer convenience and it
is also important to make sure that the customers are happy with the provided-on board
facilities (Leong, Hew, Lee and Ooi 2015).
4. In order to expand the network coverage and to increase sharing of resources with other
airlines it is important for these American international airline agents is to participate
making alliances.
5. American international airline agencies need to make good relationship with the suppliers
of those countries where they are going to expand their business as airline business
mostly rely on and its suppliers as they provide important equipment maintenance
catering cleaning etc. These services should be taken care of very carefully as these are
directly linked to the customer experiences and loyalty.
Opportunities for Companies Entering a New Market
Various opportunities open up for American international airline agencies while entering into a
new market.
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1. Without any doubt the biggest advantage for companies entering into a new market is to
have a whole set of new customers. Not only it allows companies to offer it services to
the new customers but also it allows companies to diversify the market. with a larger
customer base, the company would be able to achieve and maximize profit margin.
2. Expanding the business into new markets would obviously improve the knowledge and
behaviour of the company. That knowledge and information regarding the behaviour of
the population of the country would help the company to understand how to expertise and
adapt to the New Market by implementing innovative business strategy and technological
advancement (Horner and Swarbrooke 2016).
3. Entering new markets not only give advantages to the company but also improve the
market structure as it would give customers a wide range of alternative to choose from.
then the customer would be able to know which company provides better Quality
Services.
The three American international airline carriers named Delta airlines American airlines and
United airlines are already operating to more than 15 countries and now they are trying to expand
their services to other countries. Expanding their businesses to the other countries
Recommended Marketing Strategies
The marketing strategies of American international airline agencies like Delta airlines American
airlines and United airlines should be built on some cornerstones for example implementation of
information and electronic Technologies in the business operation, ensuring convenience
comfort and safety to the customers and providing customers with the best possible services
giving them best onboard experiences.
Pricing strategy
Pricing strategy is one of the key aspects to build a proper marketing strategy for American
international airline agencies. Price is one of the most important factors that drives the market
and these airline Agencies should aim to be the lowest priced competitor in the market. These
companies should make a proper marketing strategy by giving the customers the best possible
onboard experiences at a fair and predictable price. These Agencies should also provide
discounts for early reservation and buying tickets a long before the journey. they should also give
discounts to the customers for purchasing ticket online. Sometimes customers cancel tickets and
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most of airline Agencies charge high cancellation fee to the customers. These Agencies should
charge the customer as low as possible.
Promotion strategy
Proper promotional strategy always helps a business organisation to reach to a large new
customer base and achieve larger revenue high profit margin in future. Delta Airlines American
airlines and United airlines should make a proper promotional strategy to strengthen public
relations by reaching directly to the customers with well-designed and unique advertisement.
These airline Agencies should build Rock solid highly functional and user-friendly official
website where the customers would be able to get all important information regarding their
journey. Customers always look for information regarding e ticketing and reservation. User
friendly website would give customer a pleasure experience and it would be simpler for the
airline agents to make the process more efficient and economical.
Sales strategy
American international airline agencies should make proper sales strategy in order to make the
customers purchase ticket from their own reservations and ticketing services. Sometimes
customers don't want to purchase tickets on their own or they don't know how to book tickets
online. So, they approach to other travel agencies who purchase tickets for the customers. In this
process the revenue is shared in the form of commissions. In order to make the customers buy
tickets from their own ticketing services, these Agencies should provide proper discounts to the
customers and make the process of e-ticketing, e-reservation and e-check in convenient for the
customers.
Conclusion
Effective and strategic marketing process would allow an organisation to create a huge customer
base making new customers and achieving maximum market share in the process and also
improving customer loyalty and the brand value of the organisation. An organisation undertakes
the process of marketing in its business operation in order to create deliver or communicate with
the customers through selling a new or modified products. The process of marketing is done in
order to create a huge customer base and to reach to the potential customers which ultimately
benefit the organisation and its shareholders. In this study the learner has discussed how the three
International American carriers Delta airlines American airlines and United airlines will be able
to retain their brand value and reputation in the airline market. In this study, strategic analysis of
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American airlines has been discussed through some business analysis framework like PESTLE
analysis, porter's five forces framework and SWOT analysis.
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References
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Hannigan, T.J., Hamilton III, R.D. and Mudambi, R., 2015. Competition and competitiveness in
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Pearson, S., 2016. Building brands directly: creating business value from customer relationships.
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