Integrated Marketing Planning: Oman Air's Pricing Strategy Analysis

This report provides an in-depth analysis of Oman Air's integrated marketing planning, with a specific focus on the impact of its pricing strategy. The study explores the crucial role of integrated marketing planning in business, emphasizing the importance of customer interaction and transparent communication channels. It identifies the independent and dependent variables, analyzing factors affecting them and applying relevant theories and models. The research examines the challenges Oman Air faces due to high ticket prices, luxurious positioning, and increasing fuel costs. The report evaluates pricing strategies, including premium, penetration, economy, and price skimming, and discusses models like the Freemium and cost-based models. It also highlights opportunities and challenges related to high prices, offering recommendations for strengthening Oman Air's customer base and improving business performance in a competitive market. The report concludes with a reflection on the research findings and offers suggestions for future studies.

Running head: INTEGRATED MARKETING PLANNING
Impact of high prices of air tickets on integrated business process of Oman Airline
Name of the Student:
Name of the University:
Author Note:

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Executive Summary
The study describes the Integrated Marketing planning, which is considered as a very crucial part
of any business company. Each of the business companies requires maintaining the easier
process of interacting with the customers by developing a transparent communication. Moreover,
this strategy involves the connecting channels, which provide the greater value added services to
the targeted customers. After the independent and dependent variables are identified, the
researcher states the concept of the two distinctive variables along with the factors that affects
the variables. In addition to, the researcher states the application of the relevant theories and
models in respect to the variables that helps in developing better understanding on the research.
Literature study develops the conceptual and theoretical analysis of the subject matter by
evaluating the existing literature. It creates the clear linking between the distinctive variable
which suggest the core research elements more precisely. The study identifies the emerging
issues faced by Oman Airline in terms of managing the customer base due to the high price of
the tickets. The luxurious focus of this airline company and the increasing fuel rate persuade the
company to keep the ticket prices higher. However, it is important to identify the alternative
solution, which can help in strengthening the customer base in a significant way.

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Table of Contents
Introduction......................................................................................................................................4
Background of the study..................................................................................................................4
Aim and Objectives.........................................................................................................................5
Research hypothesis.........................................................................................................................6
Significance of the research.............................................................................................................6
Literature review..............................................................................................................................8
Introduction......................................................................................................................................8
Concept of pricing...........................................................................................................................8
Factors affecting pricing strategy....................................................................................................9
Offering cost....................................................................................................................................9
Demand for the product or service..................................................................................................9
Market competition........................................................................................................................10
Purchasing power of the customers...............................................................................................10
Government regulations.................................................................................................................11
Marketing method..........................................................................................................................11
Pricing strategies............................................................................................................................11
Premium pricing............................................................................................................................12
Penetration pricing.........................................................................................................................12
Economy pricing............................................................................................................................12
Price skimming..............................................................................................................................13
Theory of pricing...........................................................................................................................13
Bain’s Models for Limit-Pricing Theory of Markets....................................................................14
Models of pricing...........................................................................................................................15

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Freemium model............................................................................................................................16
Cost-based model...........................................................................................................................16
Opportunities of having high prices..............................................................................................17
Challenges due to high price on the business................................................................................18
Summary........................................................................................................................................18
Conclusion.....................................................................................................................................19
Recommendation...........................................................................................................................20
Reflection.......................................................................................................................................24
References......................................................................................................................................30

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Introduction
Integrated market planning (IMP) is a very crucial part of any business. To make an
economy run seamlessly, the interaction between the customers and the businesses must be easy
and through the integrated market planning, the businesses club all types of marketing activities
and communication to present a good experience to the customers. Integrated market planning
involves the strategies to connect the channels of integrated marketing to deliver the best value
added services to the customers (Armstrong et al. 2015). Almost all the organizations producing
and supplying goods and services in the market follow the IMP to build a relationship with the
customers by delivering highest quality services. The airlines industry is no exception. The
pricing strategy of airlines is part of the integrated market planning. People fly to places for
various reasons and the number of travelers is increasing very rapidly. The airlines have
introduced two different travel classes with different fares due to increase their profitability.
There are budget airlines also, which are becoming quite popular these days. Thus, pricing of an
airline is one of the most crucial factors to sustain in the competitive market in the air travel (Wit
and Zuidberg 2012). The research paper aims to explore the role of budget in the integrated
market planning and how that affects the performance of an airline company. To conduct this
study, Oman Air has been chosen as the case study company. The researcher will explore the
price issues of Oman Air and its impact on the consumers, which in turn affects the business
performance of Oman Air.
Background of the study
Oman Air is the national airline of the Sultanate of Oman. It is headquartered in the
Muscat International Airport. It has domestic and international flights along with air taxi and

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charter flights. Although it is the national airline of Oman, it has limited connectivity in Europe
(PAUCEANU 2014). It faces tough competition from the domestic as well as from the
international competitors. To increase the market share, Oman Air has introduced many new
things, such as, improved seats on the aircraft, in-flight entertainment systems, increased number
of flights in the established routes, door to door limousine services, lounge to aircraft limousine
services to first class passengers at Muscat and promotes to offer the unique experience of
Omani identity, culture and hospitality to improve the passenger experiences (Supian 2013). It
has also started the code share agreements with other competitor airlines to retain its market
share. However, the airline has some weaknesses due to excessive government intervention for
recruiting the locals, very few connection points in Europe, and it is also facing some issues due
to its higher price (Desai, Siddique and Yaseen 2014). The airline is more expensive in
comparison to other competitor airlines in Oman and in the Gulf and hence, faces competition in
terms of prices. It is seen that Oman Air does not reduce its ticket prices even during the peak
season, neither offer any promotional offers, similar to its competitors. Thus, as the demand for
the economy and budget airline is increasing, it is found that, Oman Air has not revised its
pricing policy in the face of rising competition (De Bel-Air 2015). Budget and pricing strategy
play an important role in the integrated marketing planning of any company. Hence, through this
research study, the researcher will explore how the budget or pricing strategy of the airline
affects the integrated marketing planning and business performance of Oman Air.
Aim and Objectives
The aim of the research is to evaluate the role of pricing strategy in the integrated
marketing planning of Oman air.

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The objectives of the study are:
 To evaluate the factors if integrated market planning
 To examine the role of pricing strategy or budget in the integrated market planning of
Oman Air
 To assess the impact of integrated market planning on the business performance of Oman
Air
Research hypothesis
H0 (null hypothesis): Pricing strategy of Oman Air does not have any impact on the integrated
market planning of the company.
H1 (alternative hypothesis): Pricing strategy of Oman Air has significant impact on the
integrated market planning of the company.
Significance of the research
Integrated marketing plan refers to the combination of strategies to implement all types of
marketing process to achieve the organizational goals. The plan is made of market analysis,
objectives and strategies, marketing channels, success factors, team plans, marketing calendar,
marketing budget, messaging, repositioning, target market restructuring and reporting (Hill,
Jones and Schilling 2012). Hence, it can be said that, marketing budget as well as budget of a
company is a major element in the integrated marketing plan of the company. A company must
utilize its budget in such a manner that it would help in increasing the market share and
profitability of the company. The airlines industry also applies this strategy to increase their sales
and market position. The integrated marketing plan helps the airlines companies to explore the

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market opportunities and analyze those to find out the areas where they should invest to increase
their market share. Oman Air believes in providing the most luxurious experience of air travel to
the passengers and thereby they have kept the price high. On one hand, it is popular among the
class who prefers luxury than economy, on the other hand, due to the high price, many
passengers are choosing the low price rival airlines (Roy 2012). Hence, the pricing strategy of
Oman Air is not helping them to capture a bigger market or retain the existing customers.
Through this research, the researcher wants to explore the potential opportunities for Oman Air
to maintain their original business agenda to provide the highest quality of services, and at the
same time, restructuring the pricing strategy in manner that can help them to increase popularity
as well as profitability in the airline industry.

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Literature review
Introduction
This chapter introduces the independent and the dependent variable based on which the
entire literature review is conducted. After the independent and dependent variables are
identified, the researcher states the concept of the two distinctive variables along with the factors
that affects the variables. In addition to, the researcher states the application of the relevant
theories and models in respect to the variables that helps in developing better understanding on
the research. The researcher analyzes the various factors affecting the distinctive variables
critically. Moreover, this chapter also helps in identifying the potential gap encountered based on
which the coming chapters of the research are developed.
Concept of pricing
Pricing is one of the most important factors that determine the profit and loss for the
business organizations. As commented by Barquet et al. (2013), price is defined as the value that
is allocated or associated with a particular product or service. The price is set for the particular
product or service by the business organizations is the result of complex calculations, market
research and the risk taking ability of the business organizations. However, as argued by
Monroe, Rikala and Somervuori (2015), the concept of price highlights considering the target
market segments, the ability of the customers to pay, the past, present and future condition of the
market. In addition to, the price of the products is decided after considering the actions of the
potential competitors, input costs and trade margins. The business organizations sell the
particular product or service to the target customers by using the price set by them. Thus, pricing

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is regarded as the fundamental aspect of financial modeling that determines the profit and loss
for the business organizations.
Factors affecting pricing strategy
It is important for the business organizations to consider the various factors that affect the
pricing strategy of the product or the service. The different factors that affect the pricing are the
offering cost, the demand of the product or service, existing market competition, purchasing
power of the customers, government regulations and the marketing method that is used.
Offering cost
While deciding the final cost of the product or service that the company offering, it is
important for them to consider the cost that is involved in making the service for the target
customers. This includes both fixed and variable costs, as the company has to recover both the
costs. The overall cost for making the product or service ready is one of the most components for
deciding price for it. This is because the company spends financial resources in developing the
product or the service (Akamavi et al. 2015). The business organizations cannot sell the product
or the service at less than the cost of production. Thus, before deciding the offering cost is
essential for the business organization.
Demand for the product or service
While fixing the cost for the service, it is important to analyze the demand of the product.
This provides an opportunity for the business organizations to determine whether the demand of
the service is more than the supply. Analyzing the ratio of demand and supply is essential for
deciding the price for the particular product or service (Lin, Tan and Geng 2013). For instance,

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the business organizations can set higher price if the product or service is highly demanded
among the customers. This is because the customers are ready and willing to pay any amount or
price fixed by the business organizations, as it is not readily available in the market.
Market competition
While deciding the price, the firms have to analyze the present competition in the market.
This allows the firms to decide whether the competition is higher or lower. Business
organizations offering similar products and service are available in the market that gives rise to
tough and fierce market competition (Bennett et al. 2013). As a result, the customers tend to get
various alternatives for fulfilling their need. For instance, if the customers feel that a company is
charging more for a product, they tend to look for the same product or service of another
company. For instance, business organizations tend to keep the price lower if the market
competition is higher. This allows them to fight and face the competition effectively.
Purchasing power of the customers
It is important for the business organizations to analyze the purchasing power of the
target customers, as this helps in deciding the price and developing the product or service
accordingly. This is because spending huge financial resources on the production or
manufacturing of a product for the customers with less purchasing power results in huge business
loss. The business organizations ultimately fail in selling the product or service to the target
market thereby, incurring huge loss and debts. Determining the purchasing power of the
customers is essential for the business organizations, as this provides an opportunity for the firms
to plan the financial resources they have used for manufacturing or developing the product

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(Andreti et al. 2013). This is because the company aims towards refill the investment they have
made by selling the product to the customers.
Government regulations
The business organizations have to consider the rules and regulations of the government
of the particular country while fixing the price of the service or the product. This is because the
company has to pay tax on the income or profit they get after selling the product or service.
Thus, the firms have to decide the price by considering the government rules. It is important for
the business organizations to pay tax to the government, as it is used for the overall development
of the country. Considering the government regulation allows the firms to fix the price by
maintaining their profit margin appropriately (Doppelt 2017).
Marketing method
The marketing methods have evolved distinctively over the years thereby, resulting in
change of the financial resources required (Yoo and Bai 2013). Thus, the marketing methods
used for communicating the product or service to the target customers is also considered by the
firms while fixing the price, as they plan to return the investment to the company.
Pricing strategies
Different types of pricing strategies have the significant contribution towards developing
a strong customer base. Organisations use the appropriate pricing strategy to attract a large
number of customers towards availing the product or services (Porto 2016). The airline industry
is not an exception in such cases. This industry is also using the diverse types of the pricing
strategy that are suitable enough to attract a larger number of passengers. These pricing strategies