Marketing Case Analysis

Cebu Pacific Air: Now, Everybody Can Fly

Questions and Answers:

1. Cebu Pacific’s success can be attributed to a low-price strategy and loyal

customers. Why do you think value pricing is not just about lowering prices of

your product?

Value pricing is not just about lowering prices of your product, but also

about the customer value that the product could offer/give that could satisfy your

customer’s needs and wants. Customers measure the value or benefit they will

receive against the price they will pay for the product or service.

2. Describe how Cebu Pacific utilizes its marketing mix to achieve successful

operations.

Cebu Pacific understands its customers’ needs and adds more customer

value. Customers of Cebu Pacific get their value through online reservations,

which are very convenient to make, on-time departures and arrivals, and low

promo fares. It has also made use of the new social media platforms, such as

Twitter, and is the first airline in the Philippines to have used this technology.

3. You are the marketing manager of Cebu Pacific. You notice that your competitors

are following your low-price strategy. Discuss your counterstrategies.

I will still use the low-price strategy, but increase the customer service that

the company offers to the customers. We will also conduct contests through the

use of social media that will give away promo package (includes roundtrip ticket,

food and accommodation) to the winners.

4. You are the CEO of Cebu Pacific. What marketing strategies are you going to

implement to sustain the increasing popularity of your company in the airline

industry?

I will make use of the social media platforms such as facebook, youtube,

instagram or twitter. Since these forms of media are widely used, it will help on

promoting and advertising the company.

Cebu Pacific Air: Now, Everybody Can Fly

MARKETING CASE ANALYSIS

I. Time Context

The case happened on year 2010

II. Point of View

Mr. Lance Gokongwei, President and CEO of JG Summit Holding

III. Statement of the Problem

How can Cebu Pacific Air stays as the top airline company in the

Philippines?

IV. Statement of the Objectives

To increase the number of carried passengers by 30%-40% on both domestic

and international flights in the year 2013 by acquiring two new aircrafts.

To achieve ₱100M target return on investment by giving higher customer

values in every passengers at year 2013.

To establish additional international destination in North America by the year

2013 and in Europe by the year 2016.

V. Areas of Considerations (S.W.O.T. Analysis)

Strengths

Cebu Pacific was the biggest domestic carrier with more than 45% market

share.

In 2008, Cebu Pacific ranked fifth in Asia in terms of an increase in total

passengers carried.

Cebu Pacific offers a truly Filipino culture of hospitality by ensuring its

passengers enjoy their flight.

Cebu Pacific offers low-cost air travel both in domestic and international

flights.

Weaknesses

Cebu Pacific has implemented a counteroffensive only now, when

confronted with problems and loss of its position in the air travel market.

Cebu Pacific has established international destination only in Asia.

Cebu Pacific’s air travel cost is increasing.

Opportunities

There are an increasing number of passengers in both domestic and

international flights that can be beneficial to the company.

Customers measure the value or benefit they will receive against the price

they will pay for the product or service.

Airlines are already accepted in the market.

Threats

Their competitors are already established and known in the market.

Their competitor follows their low pricing strategy.

VI. Alternative Course of Action (ACA)

ACA No. 1 – Promote the airline through major sponsoring in television show/s

or giving promo fares by online, radio or television contests.

Pros

The company will attract more customers because of their promo.

This will be an added exposure and promotion to the airline.

The company will be more known by the people.

Cons

There will be an added cost to the company.

Sponsoring is already used by other competitors.

ACA No. 2 – Cebu Pacific Air must be more committed in giving customer

service before, during and after the flight.

Pros

Customers’ loyalty to the airline will be much stronger.

The passengers will be delighted with the flight they experience.

The number of passengers that fly with Cebu Pacific will increase.

Cons

The passengers, specially the regular ones, might get bored on the

same games/contests given during the flight.

There will be an added cost to the company.

ACA No. 3 – Cebu Pacific Air must have additional flight specifically in tourist

spot destinations in the Philippines.

Pros

The customers will have a wide variety of destinations to choose.

Cebu Pacific Air will also help promote the Philippines.

The more destination there is, the more profit generated by the

airline.

Cons

There will be an added cost to the company.

There will be a need for more employees.

VII. Conclusion and Recommendation

Based from the facts of the case, Cebu Pacific Air is the no. 1 airline in the

Philippines. At present, Cebu Pacific has already established 32 domestic

destinations and serves 12 countries with 16 destinations. It is the first airline to

use the low-price strategy but still offers a high customer value. As competition

rises, other competitors have followed the low-price strategy and started offering

lower fare than what Cebu Pacific offers.

Since Cebu Pacific is known for their low-price fare and exemplary

customer service to passengers, it is recommended the adoption of Alternative

Course of Action No. 2 (ACA No. 2) – Cebu Pacific Air must be more committed

in giving customer service before, during and after the flight. The customer will be

delighted in their flight experience which will gain loyalty to the company.

It is also recommended the adoption of Alternative Course of Action No. 3

(ACA No. 3) – Cebu Pacific Air must have additional flight specifically in tourist

spot destinations in the Philippines. Customers will have a wide variety of

destinations to choose and the more a company offers, the more profit is

generated.

VIII. Action Plan and Implementation

Marketing Activity Schedule Hiring of new employees.

Seminar and training for old and new employees.

January – March

2011

Announcement of new flight destinations through the

use of media (television, radio, online, newspapers

and magazines).

Announcement of new promo fares for the new

destinations.

April – June 2011

IX. Marketing Control

Monitoring the increase in number of passengers after the announcement of

new flight destinations on a monthly basis.

Analyzing the Customer Perceived Value (CPV) of the customers who

travelled in the new destinations for three months.

Make a monthly report of the market shares.