Project Report A Comparative Study of Customer’s Perception and Marketing Strategies

of “SAHARA AIRLINES”

With other market players in the industry”

SUBMITTED BY: SUBMITTED TO:

BLS INSTITUTE OF TECHNOLOGY MANAGEMENT

(AFFILIATED TO G.G.S INDRAPRASTHA UNIVERSITY )Delhi-Rohtak Road,NH-10,JAKHODA,

BAHADURGHAR-124507(HR).Ph.—01276-241922,241822

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ACKNOWLEDGEMENT

I consider it my grate privilege to have worked under the expert guidance

of my professor Mr. Her enlightened guidance, valuable suggestion &

constant encouragement saved me from many pitfalls through the course

of my study.

I am particularly grateful to my guiding hand for her pains taking efforts

in editing the text of the study.

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CONTENTS

INTRODUCTION A glimpse of the Indian (Domestic) Aviation Industry The Resource of Domestic Airlines

OBJECTIVES OF THE STUDY PROFILE OF THE SAHARA AIRLINES

Corporate Profile Sahara Airlines-Introduction Achievements – Slow and Steady Wins Marketing Strategies

COMPETITORS AND THEIR COMPARISON Three Domestic Airlines Marketing Strategy- An Overview and Comparison

CUSTOMER PERCEPTIONS Factors influencing perception of traveler Service encounters Evidence of Service Image or Price

CONCLUSION AND RECOMMENDATIONS BIBLIOGRAPHY

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INTRODUCTION

A glimpse of the Indian (Domestic) Aviation Industry

Though the Open Sky Policy was announced 11 years back, for all

practical purposes, the Indian aviation industry actually took off with the

entry of as many as 6 companies in the first half of 1991 when the state

run Indian Airlines was facing industrial strife.

After reporting a Rs.11 crore profit in 1988-89, Indian Airlines, suddenly

saw it’s market share drop and it’s supremacy challenged. Pilots let the

airline in hordes to more lucrative jobs with the private operators, which

resulted in under utilisation of it’s Boeing fleet. Passengers, too, suddenly

realised that there were airlines willing to offer that little extra bit that

means so much, and Indian Airlines suddenly saw it’s market share drop

to 53 per cent from it’s earlier unassailable position.

The growing disenchantment with the services (or lack of it) of IA and

the frequent agitation by it’s employers prompted the “decision-markets”

to usher in private air-taxi operators (ATOs). Nineteen others got no

objection certificates (NOC). By 1993, there were 12 operators in the

market, by their market share in domestic traffic was negligible.

Come 1996, there were seven players who were operating with a

scheduled airline’s while 22 others were fling as non-scheduled or ATO.

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The scheduled airlines included East West Airlines, Modi-luft, Damania,

Jet Airways, NEPC and Archana. Companies such as West leased several

100 plus seated aircraft and developed a large network in a short span. Jet

Airways grew slowly and not only outlived competition, but established

itself as the largest private sector player.

While the market share of private operators soared to 41% from 1993 to

1996 (eating into IA’s share), the initial euphoria died out in 1994 when

the Air Corporation Act of 1953 was repealed and it became obligatory

for ATOs with three or more aircraft to become scheduled airlines and

operate according to certain guidelines. It became mandatory for

scheduled airlines to fly at least 10% of their capacity to the far-flung

uneconomical areas such as northeast, Jammu and Kashmir and 50% to

non-trunk stations.

With this, came the realisation that a whole lot of overheads associated

with the flying were involved and higher utilization of the leased aircraft

and better route planning was essential to survive. Obviously, when there

was a mismatch between the returns and the outgo, some of them shut

shops.

But, even before the guidelines were issued in 1994, Damania, which had

created brand equity of its own as an elegant, passenger- friendly airline,

buckled under pressure and was purchased by NEPC in 1993. UB Air and

Raj Air followed it. By the first quarter of 1997, three more airlines

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suspended their operations due to non-availability of aircraft- East West

in May 1996, Modiluft in November 1996, and NEPC in March 1997.

Currently, Jet Airways, Sahara Airlines, Archana and UP Airways are the

only survivors.

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Aircraft Strength of Major Players

Airline Jets Jet-Type Non-Jets Total

IA 54 AIRBus 300 10 - 54

AIRBus 320 26

Boeing 737-200 18

East-West 7 Boeing 737-200 7 3 10

Damania 4 Boeing 737-200 2 - 4

Boeing 737-282 2

Jet 6 Boeing 737-300 4 - 6

- Boeing 737-300 2

Modiluft 4 Boeing 737-400 4 - 4

Sahara 1 Boeing 737-200 1 - 1

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The Resource of Domestic Airlines

They came, some faltered, most fell by the side, but while they were

there, they managed to shake Indian Airlines from it’s monopolistic

complacency, and prepared it to battle for its turt with the likes of Jet

Airways and Sahara Airways as and when they fly.

After a fairly long bout of uncertainty, domestic airlines are on the

upswing again. And as aviation experts projected, only the players, who

understood the rules of the game, have survived and are prepared to make

a comeback to this glamorous but highly capital- intensive industry.

Jet Airways is on a fleet expansion spree, while Sahara Airlines is

preparing for a face life that should really gear up the domestic market.

Indian Airlines, despite its failure to phase out older aircraft, is regaining

lost ground.

Today, the Indian sky is left for Jet Airways, Sahara Airlines and Indian

Airlines to expand and grow…

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FINANCIAL PERFORMANCE

Reasons for losses

1. Grounding of A320s:

The entire fleet of A320s was grounded for 9 months by an order of the Government following an air crash at Bangalore in February 1990.

Rs. 200 crore

2. Unfair competition:

The open sky policy initially resulted in unfair competition. While the private airlines were free to concentrate all their operations on the profit making trunk routes, Indian Airlines was forced to maintain a network throughout the country, of which over 70% of the routes were loss-making. Most of these loss-making routes are operated for socio-economic reasons.

Rs. 150 crore

3. Merger of Vayudoot:

After the merger of Vayudoot with Indian Airlines, Indian Airlines had to bear Vayudoot’s accumulated losses and also the recurring burden, while absorbing 1000 of its employees.

Accumulated losses Rs. 207 crore

Annual Recurring burden Rs. 15 crore

4. Exodus of pilots & engineers:

When private air operators entered the domestic air market, Indian Airlines lost 166 pilots and 94 engineers between 1992 and 1994. The airline lost Check Pilots, Instructors and Examiners, which led not only to a shortage of Commanders but also to the inability to train new Commanders. This resulted in gross under-utilization of aircraft, and further losses.

Not quantifiable

5. High cost of Aviation Turbine Fuel:

For international operations, Indian Airlines was charged a rate that was 42% higher than for Air India and other foreign operators, which led to further losses

Rs. 34 crore

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The study was undertaken to gain an insight into the competitive

strategies of the three major domestic airlines in the country. The focus

was mainly on the strategies in response to the customer’s requirements.

Therefore a detailed knowledge of customer’s requirements was

necessary. The information on these aspects was collected through

primary and secondary means including discussion with the airline staff

at various levels. Accordingly a customer response questionnaire to

know the perception of customers regarding the services was evolved as

the primary sources of information while the airlines literature/pamphlets

constituted the secondary source of information. The sample size was

100 that included mostly businessmen in the age group of 30-55.

The study reveals that the healthy competition between airline have

brought about the new trends in the quality of service. The customer care

has been the focus of their strategies, which was earlier neglected due to

monopolistic environment of single airline run by the government. The

Jet Airways has been characterised as the most preferred airline due to

their emphasis on the quality of service. The Sahara Airlines has been

focussing on the customer and evolved their strategy by detailed study of

analysis of psychological and demographic factor. The massive price

cuts and holiday packages has been their main thrust areas. The Indian

Airlines, however, has been relying on their vast infrastructure facilities

and large fleet of aircraft and aggressive advertising campaigns.

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OBJECTIVES OF THE STUDY

To get an insight into the marketing strategies of Sahara Airlines

To do a marketing strategy analysis of Sahara Airlines.

To understand the customer’s preferences or perceptions of services

provided by Sahara Airlines.

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THE SAHARA INDIA GROUP

A CORPORATE PROFILE

Sahara airlines are a part of the 4000 crore Sahara India Group.

The Sahara India group, which began with a very modest investment in

Gorakhpur in 1978, today, has a business level of Rs.6000 crores; with

over 1280 offices all over India.

Establishment

Sahara has one of the largest infrastructures in the private sector in India.

It has a workforce of 6,00,000 truly committed individuals. The company

has never had any union related problems due to the fact, that there is no

union in the Sahara Group.

Ownership

The organization has a unique concept of ownership i.e. collective

ownership, which means continuous collective growth for joint sharing

and caring that gives an input to their philosophy of collective

materialism. The company’s shareholders, Partners and Directors are

from the workers rank and all of their have taken an oath through a

Notary Affidavit in the court of law that neither they nor any of their

family members shall have any claim on the assets or profits of the

company.

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Profit Sharing:

The policy of profit sharing is also very unique. The company gives 25%

towards social development, 35% towards company’s net owned funds,

and 40% towards the welfare of Karmyogi workers.

SAHARA INDIA

Sahara India Group has business interests in the following sectors:

1. Parabanking: Sahara Parabanking is India’s largest savings

organisation in the Pvt. Sector,. Serving one out of every hundred

Indians i.e. more than 1 crore depositors.

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Organizational Activities

Parabanking Aviation Housing

Mass Communication

Export

TV Network

Aquaculture

2. Infrastructure and Housing: One of the largest Infrastructure and

House Company in India. Sahara India Housing is a highly ambitious

venture and promises to grow into a powerful unit of the Sahara India

Pariwar. Sahara activities are in progress on around 5,000 acre of

company owned land and projects worth approximately Rs.6, 000

crore, one of the largest in India.

3. Aviation: Sahara Airlines, was launched on 3rd December 1993. The

company has, ever since recorded an impressive performance. It’s

fleet includes Boeing 737-200 Aircraft and the Advanced Aviation

Technology Boeing 737-400. Nearly 30 flights take off, everyday.

4. Mass Communication:

(a) Social Research and Development Wing: An in-depth participative

study and survey of National issues like Election-Politics, Education,

Population, Religion and Media problems with an ambitious aim to

create a national Platform for debate on National issues.

(b) Rashtriya Sahara: India’s largest circulated Hindi daily launched in

the post independence period, with 14 morning editions. The

Rashtriya Sahara, English and Urdu Magazines have a combined

readership of over 32 lakhs.

(c) Print Production: One of the largest and fully integrated, Pre-press

one-press and post press print production facilities in India.

(d) Audio-visual Production House in Bombay is the biggest and the best

Audio-visual facility in India, in the Pvt. Sector.

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NEW VENTURES

Overseas Market (Export): With an office, warehouse and showroom in

London, Sahara plans to open offices and showrooms in the U.S.,

Germany and the Middle East with a wide range of Indian commodities

like leather, textile items and Indian Handicrafts.

Domestic Market: The Sahara Group is planning to enter the domestic

market with consumer products like clothes, toys, cosmetics, exclusive

electronic items, security items etc.

Aquaculture: A 500 acres project in ganga sagar in West Bengal.

Sahara TV Network: The group also plans to start a satellite channel

shortly.

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SAHARA AIRLINES

AN INTRODUCTION

Sahara Airlines Commenced operations on 3rd December 1993, with a

single Boeing 737.200. The airline has come a long way since and

presently has a fleet strength of (2) 737-400, (4) 737-200 and 4 Twin

Engine Eurocopters.

The airline is a part of the Sahara India Group, whose current business

level has touched US $ 1700 million, with an asset base of approx. US $

2 Billion. The total workforce comprises of 6,00,000 employees with

over 1280 offices all over India.

Sahara airlines operate to 13 destinations in India with 28 flights daily,

with a seat capacity of 1.2 million per annum.

The airline has 2 main hubs, at Delhi and Mumbai. It employs 1700

highly qualified, experienced and dedicated staff members, including 91

pilots and 105 flight crew member’s all of whom have received intensive

training at British Caledonian.

Currently, Sahara Airlines is in the middle of an image enhancing, brand

building and expansion programme, in an attempt to change the way

Indians fly…

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ACHIEVEMENTS

SLOW & STEADY WINS

While the domestic aviation industry in India has been going through

tosses and turns and the players have one after another withdrawn out of

the game, there is one airline which has been slowly and steadily edging

its way up-this is SAHARA AIRLINES!

Not only has the airline managed to come out of red, but has also won a

couple of global awards:

Sahara Airlines Won the prestigious Pacific Area Travel Writer’s

Association (PATWA) award for the ‘Best Domestic Airline In

Business Travel’ (ITB, Berlin, 1998).

The airline also received the World Travel Market 1997 (WTM)

global Award for its ‘Quality of Service’ at Earls Court, London.

Sahara Airlines recorded a 10% growth in load factors for the first half of

97-98 vis-à-vis 96-97. The Business class recorded a 50% growth in

volume and 30% growth in yields.

The performance statistics of Sahara Airlines from 1st April ’02 to 31st

December ’03 were:

Dispatch Reliability : 99.80%

On-Time Performance : 97.60%

Customer Satisfaction

Ratings : 95.02%

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Top Boeing Rating for Sahara: Sahara airlines have been rated as the

best user of Boeing aircraft in the country, clocking 200% schedule

reliability. According to the US-based aircraft Manufacturer, the private

operator registered an aircraft utilization time of 10.17 hrs for B737 –400

aircraft. This is the best performance in the case of commercial operations

conducted in the country during the third quarter of 2002.

Based on Boeings assessment of reliability, maintainability,

electromagnetic and hardware standards and systems engineering, Sahara

has being rated highly in the B737-300 and 400-500 category. The

Boeing report reflects the strength of Sahara’s engineering and

maintenance standards.

Profits of Sahara Airlines have also registered an increase. From a

Modest Rs.36 lakh profit in 1995-96, its profits jumped to Rs.5.4 crore in

1997-98. For the current fiscal, profits are targeted at over Rs.10 crore.

The airline enjoys occupancy rates of 70% during peak seasons and off-

season occupancies of 62%.

DCS Implementation: Departure control system has been implemented

in Delhi, Mumbai, Chennai, Bangalore and Goa to start with coming up

soon will be DCS automated load and trim sheet system.

Implementation of IVRS (Interactive Voice Response Syst em)

The latest implementation has been the introduction of IVRS which

enables Sahara’s valued passengers and clients to gets all kinds of

information and service from a single number which is accessible 24

hours a day, through out the year.

The above module includes:

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Automated Tele-check in Service.

Automated Meal Service Module

Various Information Modules on Frequent Flier Programme/Schemes,

etc.

Complaints and Suggestions.

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INGREDIENTS OF SUCCESS

(A) Policy of Slow and steady Growth

The airline industry grows with experience. It is capital intensive, the loss

amounts tend to pile up and pre-mature expansion can cause severe

problems. The reason why Sahara Airlines could sustain was, that the

airline did it’s home work well. It watched the government policy and the

market pulse and was slow in expansion.

(B) High On Technology and engineering

The airline invests over Rs.50 crores on aircraft maintenance and

computerised inventory to ensure high dispatch reliability and on-time

performance. The engineering departments is fully equipped with test

equipment, spiral tools etc. required for routine maintenance and heavy

maintenance like ‘C’ checks and engine changes advanced ground

support systems ensure that proper Technological Standards are

Maintained. The Frontline Systems are totally automated. The next phase

of automation includes computerization of Revenue Management Flight

Plan Operations, Engineering and Crew Roistering. The airline intends to

invest approx. 2 million US $ in a phased manner in Information

Technology and use it as a strategic advantage.

Sahara airlines have a major engineering base at New Delhi. The airline

intends to enhance the Engineering facilities at Mumbai in tune with the

expansion programme. The engineering base is supported by well-

addressed systems from Malaysian Airline System. The airline has a large

force of skilled and experienced Engineers and Technicians.

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The airline has its own NDT shops, Wheels and Brake assembly shop,

battery charging shop, Avionics shop and Seat Repair shop. Sahara

airlines are the only domestic airline to have its own Hangar for Aircraft

maintenance. The airline has successfully completed a ‘D’ check and 7’C'

checks.

(C) High on Corporate Culture

The Employees of Sahara Airlines share similar values and concerns and

follows the airline tradition of customer can and service.

The Employees constitute a cohesive group and work together as a team

with the same culture, attitudes and motivation, and at the same time

ensuring continuous collective growth for collective sharing and caring,

that gives, an impetus to the airlines philosophy of collective materialism.

(D) High on People and Training

Sahara Airlines has over 1600 highly qualified, experienced and

dedicated staff including 91 pilots, 121 flight crew, 61 Engineers, 82

Technicians and 865 ground staff.

The airline has a dedicated Aviation Training Academy. This academy is

totally equipped with all facilities and covers all In-house training

requirements of engineering. Commercial Operations. In-flight Crew and

Catering Departments and Provides complete training solutions.

Professionals conduct specially designed courses and workshops on

product orientation, customer awareness, supervisory skills and other

service enhancement skills. The emphasis is also on soft skills such as

attitude and style apart from technical product knowledge.

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MARKETING STRATEGIES

HIGH ON QUALITY, CUSTOMER VALUE AND CUSTOMER

CARE

Sahara Airlines is all about customer care. A service offered in all its

flights to all it passengers. At Sahara, it is a firm belief to uphold the

highest standards of traditional Indian hospitality, culture and courtesy.

Sahara’s highly trained personnel ensure that a clients trip is not only

comfortable, but a memorable one right from the time of check Sahara’s

value additions such as Valet Service, Tele Check personalized reading

kit and meal preferences ensure highest standard in customer care and

customer satisfaction.

As competition increase and maximizing shareholders wealth attains

paramount importance, the need for enhancing customer value is now felt

by the corporate sector more than ever before. A firm’s competitive

advantage rests singularly on 2 factors:

(i) The manner in which it is able to create customer value to make its

offering unique vis-à-vis its competitors and.

(ii) How it delivers such value at the least possible cost.

Value to an airlines customers, is a basket of benefits which he gets while

consuming the service offered by the airline. Value expectation reflects a

customers concern for the time, money and effort spent by him to procure

the airline’s service and the resulting tangible and intangible benefits he

gets out of the same.

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Tracking Customer Value Expectations: If satisfying a customer value

expectation is the hallmark of any company’s strategy (as is the case with

Sahara Airlines), it becomes important to track the benefits customers are

looking for. In order to understand this, the 4 important areas to examine

are shown in the figure below:

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Study of Psychographic and Demographic Factors to understand WH 4 customers need specific benefits.

Study of post purchase behaviour

(including any dissatisfactory)

Customer Value Expectations Study of how

customers use the

Study of the process of Acquisition of Service and underlying cost/Differentiation

Identifying Customers Value Expectations

An examination of the above four aspects reveals the areas where the

organization should concentrate upon to create the benefit or value

customer are looking for. Understanding the rationale behind customer

requirements can be obtained by studying the demographic and

Psychographic factors pertaining to the target customer group. This

clearly indicates what specific product features and ‘add-ons’ are to be

offered to ensure value acquisition by the customers.

Creating and Delivering the Value: Cost competitiveness of a

company’s value creation and delivery process, and its uniqueness and

sustainability, provide the company with a long term competitive

advantage that cannot be watched by both existing and potential

opponents. To achieve this, value creating activities within the firm

should be organized and managed in a manner that help in creating the

customer value in a unique and cost-competitive way.

Sustaining the advantages of uniqueness and cost is possible only if the

internal value activities and underlying business processes are designed

and managed innovtivley. Innovation in key since value creating service

features as well as the delivery process will always be under the threat of

imitation by competitors. Hence, staying ahead will always be a major

challenge.

Successful organizations are able to assess correctly and often, in

advance, what their target consumers truly want-based on their

accumulated experience as well as through formal market research and

create, communicate and deliver these values in a manner that is for

better than that of their competitors.

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Continuous customer response system plays a vital role. For this a

monthly in-house customer feed –back survey based on 15,000 responses

has seen Sahara’s ratings rise from 6 to over 9 out of 10 in the last 6

months.

The customer response is reflected in the market. Sahara’s business class,

with the brand name ‘Sahara Royale’ is the most expensive in the

domestic airline industry, enjoying an average premium of Rs. 300-400

over Indian Airline and Jet Airways.

Sahara maintains that the higher price it commands is because of the add

one that it provides to consumers. The airline believes in delivering the

best to all its customers. It is this belief that is reflected in its services

which are mentioned below:-

(i) Sahara Valet Service : To ensure smooth baggage handling,

exclusive valet service is provided at Sahara airline airport

counters. The idea of valet service came with reference to the lack

of adequate infrastructure at Indian airports. This is a free valet

service, for all classes at all airport s in the country.

(ii) The airline has a unique concept of ‘Promise Fulfillment Cell’ to

solve all customer problems instantly at the airports and a

dedicated Sr. Manager is exclusively in-charge of the cell.

(iii) Tele-check–In for All passengers : Another extension of customer

facilitation is the introduction of advance tele-check–in facility for

all passengers. Over 25 haunting lines have been installed for this

purpose.

(iv) Customized in Flight Cuisine : Sahara believes in the aged old

tradition of welcoming its guests with a spread of delicious

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gourmet cuisine. Special care is taken in looking into personal

dietary preferences. Which are anticipated and provided including

special Meals like Jain Meals, Diabetic Meals and Child Meals.

Sahara Royale has a unique concept of customized meal offer. The

passengers have a choice of Thai, Mexican, Italian, Chinese and

Continental health food is being incorporated in the special meal

plan. Sahara makes every effort to make the passengers feel at

home, even at great heights.

(v) In Flight Library : The airline has an international library on bard,

which includes a choice of international dailies, Magazines and an

option of selecting the latest Best Sellers. Sahara Special

passengers are also provided with a personalized Reading Kit who

includes at least 3 major dailies.

(vi) Increased leg space to ensure greater legroom on both Sahara

Royale and Sahara Special classes, provide total seating comfort on

board.

(vii) The airline provides an on-board Executive on every flight to

ensure the clients comfort.

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BRANDING

Branding allows marketers to discriminate themselves from others in the

marketplace. This ensures the sale of their product service and helps them

survive and eventually succeed.

Consumers need brands so that they can enrich their lives. While

commodities facilitate a consumer’s existence in as extremely rational

and clinical way, they fail to add texture or color to it. On the other hand,

brands, because of the imagery associated with them, actually have the

power to enhance or limit a consumers perceived or self – image.

Conventional theory states that the primary objective of any brand is to

satisfy functional, emotional, or self-expressive consumers need.

Sahara, airlines believe in building brands. The airline staff carefully

refrains from using global terms such as business and economy class. For

Sahara, travelers are a part of the ‘Sahara Royale’ or ‘Sahara Special’

class. The attempt to brand the two classes is a very deliberate one. The

airline brands are contemporary and focussed.

As mentioned earlier, Sahara’s’ Business class, with the brand name

‘Sahara Royale’ is the most expensive the domestic airline industry,

enjoying an average premium of Rs.300-400 over Indian Airlines and Jet

Airways.

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Sahara’s Latest Brand Launch – Sahara Care Club

When the competitive intensity of the market place changes from a

benign, innocent level to a tumultuous, volatile phase, the first casualty

will be the success of new brand launches. Ironically, however, in order

to achieve growth and profitability in intensively competitive markets,

companies have little options other than to offer better and innovative

products/services to consumers.

The latest entrant to join Sahara’s brands is “Sahara Care Club’

Exclusively for travel agencies who sell its tickets. This priors that the

airlines innovations are not just limited to customers.

To reward its travel agents, Sahara decided to break away from the

prevailing market norm. Instead of sending its travel agents consumer

products as gifts for good sales, Sahara decided to come, up with Sahara

Care Club. With an entry fee of Rs.250, the club offers its members

educational courses, personal accident and medical policies and deposit

schemes. With this concept, Sahara plans to bring home the fact that even

travel agencies and their staff are a part of its personnel.

Sahara care club is designed to reward and encourage the counter staff of

travel agents and the travel coordinators of corporate houses to promote

the airline. The aim of Sahara Care Club is to facilitate the sales drive and

to assist the airline to extract more business from travel agents and

corporate houses and ultimately contribute to the increase in the demand

curve of Sahara airlines.

The Sahara Care Club uses a ‘push’ strategy to influence the channel of

sale by rewarding the key persons who are directly responsible for

persuading the flyers to use Sahara Airlines.

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Communication of schemes, plans, etc to the Travel Agents, now

becomes much easier for the sales staff, i.e. care club has made the agents

more receptive and therefore support form them in times of crisis is likely

to be more. But, the programme needs a more effective communication in

the form of elaborate literature etc.

ADVERTISING

Promotion, one of the four P’s of marketing has assumed added

significance in contemporary market conditions, with almost every

product or service category inundated with brands. What, when and how

to advertise, while coping with the conflicting requirement of high recall

and quality of advertisement on the one hand and cost effectiveness on

the other has necessitated a higher workload on the grey cells of

marketers for a long time. The buying, consuming, etc. Mean that there

should be constant adaptations and innovation on promotional channels

also.

Advertising, today, is no more an “also”, bus has become a “most”. What

is also true is that any marketer worth his salt realises this. Hence, there is

an increasing competition for the consumer’s attention. In such a

situation, advertising is no different from selling a product. This in turn

implies that ones advertising has to be different as well as cost effective.

What follows is an attempt to assess the present scenario and to

improvise on the existing media vehicles to provide differentiated and

consequently more effective advertising options.

As a part of the brand building exercise Sahara Airlines launched an

international advertising campaign last year, worth $ 2 million to target

the NRI market in the UK, USA and Middle East. An advertising

campaign was also launched in the Indian, print media focussing on the

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airlines’ strengths, with an attempt to revamp the airlines’ image in the

minds of travelers.

The various types of advertising media used by Sahara Airlines are:-

1. Newspapers

2. Magazines

3. Television

4. Internet

5. Participation in travel trade events (ITB, Berlin, SATTE, TAAI, and

Tourism Exp.).

6. Hoarding.

7. Translites at the airports.

It is the responsibility of the marketing department to provide all the

necessary guidelines of how, when and where the ads will appear to the

advertising agency (in this case, Percept) which then develops attractive

advertisements.

OTHER PROMOTIONAL ACTIVITIES

(A) Packages

The Period from April to September is characterized as a low season for

the airline industry, when the flight load decreases drastically. To

maintain the load factor, passengers have to be pursued and lured into

travelling with a particular carrier. This was done, very successfully by

Sahara Airlines, during the last 2 years.

The airline launched a successful, strategy in which it tied up with

renowned hotel chains and offered business and holiday packages, to

Goa, Mumbai and Bangalore, which included free hotel stay. This was a

Maneuver, which shook the domestic airline industry.

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(a) Sahara Wonder Holiday To Goa

The Sahara Holiday plan to Goa was launched primarily to promote the

Del-Goi-Del Sector. For this, purpose the curline had tied up with

premium hotels like the heritage village club, Holiday Inn, Bogmalo

Beach Park Plaza Resort, Cidade de Goa, Taj Holiday Village and Fort

Aguada Beach Resort.

Priced at nominal rates for 3 nights and 4 days, the package included:

Air fare Del-goi-Del (Economy class ) for a single person

Airport transfer by car/coach

Accommodation in a standard AC Twin room.

Buffet breakfast, lunch, dinner and daylong snack buffets.

Welcome hamper of goan wine and cashewnuts in the room.

Half day sightseeing.

Special Gujarati Vegetarian meal, on request.

Casino coupon worth Rs. 100 per room, once during the stay.

All applicable taxes.

(b) Sahara Business Plan

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This was a plan launched primarily for the promotion of Bangalore and

Delhi sectors. Sahara, tied up with hotel ‘Le-Meridian (Bangalore) and

The Park (New Delhi) to attract more and more corporate travelers and by

providing value added services.

(c) Sahara Airlines - Holidays

This plan was similar to the goa plan. In addition to a return ticket on

Delhi – Bangalore Delhi sectors, a customer could avail of 2 nights and 3

days stay at the Taj Residency, at Bangalore. This was also viable for

other sectors, as shown below.

(B) Direct Mailers

Distribution of Direct Mailers at airports on board and at Reservation

Counter is another method adopted by Sahara airlines to convey directly

to the passengers about the airline performance, dispatch reliability and

customer’s satisfaction levels.

Various Direct Mailers, usually distributed to passengers by Sahara are:-

1. Updates

2. Sales kits

3. Schedules

4. Discounts etc.

RETENTION MARKETING

Most companies go all out to get prospects to sign on the dotted line. But

once, they acquire the client’s money, they once again concentrate on

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choosing downs another sale. Hence, while businesses are pouring vast

resources into customer seduction they are neglecting in retaining their

customers. The job of retaining satisfied customers is the marketing

battleground of this decade, and the company that excels here will win

the war.

Customer retention is the process by which an organization identities and

maintains a relationship with prime customer groups. Such a relationship

adds value to both, the producer and consumer, the decision to serve

being based on a forecast of the economic lifetime value of the customer

to the organization.

Retained customers are much more profitable than new one because they

purchase more and frequently too, often at a price premium, while at the

same time requiring low-operating costs. They also make referrals that

cost the firm nothing. A recent study by the All India Management

Association showed that among service firms, reducing customers

defections by jut 55, can boost profits by 25-85%.

By achieving retention rates that are superior to the competition, an

organization can yield competitive advantage regardless of whether its

generic business strategy is built on low cost production marketing

strategy.

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Marketers in India are finally accepting one forth – marketing strategies

of yesterday are no longer effective. They need to develop retention

marketing strategies to survive in the radically different market of

tomorrow and implementing these programs has become a pre-requisite

in the choice-choked buyers market. This realization has crept into

various sectors, one of them being the airlines industry. Indian Airlines

was among the first to initiate retention marketing programs in India.

Their frequent fliers schemes enhanced customer’s loyalty and increase

tenure by doling out free riles for every trip they take.

Frequent Flier program: Having attracted the passenger (business or

leisure traveler) to fly with a particular airline in the first instance, the

next objective is to maintain that passenger’s custom. One way of doing

this is through a loyalty-based scheme, which provides upgrades,

bonuses, or free flights based on the number of miles flown. Although the

first frequent flyer program (FFP) was introduced in 1981, by American

Airlines, today the FFP is as much a part of the airline industry as the

actual airlines. For e.g., it is estimated that 10% of the US population are

members of FFPS (Verehere, 1993).

As a marketing tool, FFPs have proved highly successful. Mainly aimed

at the business traveler, they attract the high-yield passengers who are the

profit generating ones. They also enable seats on low –load flights which

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would otherwise remain empty, to be filled as rewards to frequent flyers.

FFP involvement has become almost as important as punctuality and in-

flight service in determining choice of airline and flight. And in an effort

to be end of the best, FFPs are now tied into other products, often non-

travel related including telephone companies, credit cards, car rentals,

tour operators, hotel chains and even stocks and share (Verchere, 1993).

Information collected from FFP’s can be compiled on a database and can

be used for direct railshots and for fine-tuning /tailoring services.

Sahara’s Frequent Flyer program called, SAHARA CLUB CROWN

envisages easy redeuption of accumulated points in terms of products and

tickets to its fliers. Sahara Club Crown is a unique two-divisional

frequent flier program, to recognize and reward those who fly regularly

with the airline. The objective is to attract were travelers, particularly

corporate executives, to ensure brand loyalty, and to induce incremental

sale.

Frequent travelers are allotted points based on a certain percentage of

revenue received from them. This will benefits the travelers in the form

of special services, free tickets and products at no extra cost. In addition,

they enjoy the status of membership of an exclusive elite club.

The airline has tied up with big names like Parker, Bausch and Loub,

Oriflame, Sony, Kenstar Home appliances, Revlon, Samasung, Pierre

Cardin, Wrangler, VIP, Titan etc.

The membership is available at 3 levels:

Sahara silver

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Sahara gold, and

Sahara platinum

PRICING

All the three P’s of marketing (i.e. Place, Product, and Promotion) get

translated into this ‘P’. ‘Price’ is the ultimate “transaction border point”

between a corporation and its customer. An organization’s myriad costs

(and processes) get converted to price and a customer’s value perception

gets reduced to price. And the transition happens.

Value determination is the most crucial task of pricing strategy.

Pricing is also an interface of different functions – marketing, sales,

finance, accounts, and legal and factory processes. All the interplay needs

to converge to one number. It needs a well-coordinated organizational

process to get to good strategy.

As a part of its pricing strategy, Sahara Airlines offers: -

50 % discounts to students

50% discounts to elder Citizens

50% discounts to members of Armed forces.

Last year, to commemorate, 50 years of India’s independence and the

completion of 20 years of the corporate success of Sahara India Parivar,

Sahara Airlines announced an “Anniversary offer”.

Stand by Fares

With effect from 15th August 98 Sahara Airlines introduced the concept

of stand by fares. A special fare of 20% off on gross normal fares on all

sectors except Bom-Lko/VNS/PAT on V.V is saleable for business and

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economy class full paying adult passengers buying tickets between 3 hrs.

Before the scheduled departure of the airlines flights. On

Bom-LKO/VNS/PAT on V.V 10% off on gross normal fares.

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COMPETITORS IN THE AIRLINES INDUSTRY

MARKETING STRATEGY – AN OVERVIEW AND

COMPARISON

In service sector, the marketing strategy hinges around the marketing

mix, which is defined as the elements, organization controls that can be

used to satisfy or communicate with the customers. It includes the 7 Ps

which are product place, price, promotion, people physical evidence

and process and of late another P relevant to the service industry has

been added i.e. Pace.

Though all the competitive airlines keep these bases Ps in mind while

devising the marketing strategy but their stress varies and that is what

gives them a distinct touch and enabling them to score over the others.

While Indian Airlines excels in advertising cum media blitzkrieg and

dissemination of information about the strength of the company in a

dramatic and innovative manner to establish on emotional credible bond

with the customer, Jet Airways prides itself on superior service both on

the ground and in the air. It is also very brand conscious and has an

emasculate young cabin crew supporting a yellow rose – an international

symbol of friendship, warmth and caring. Customer satisfaction is of

prime importance to Sahara Airline. It is striving to reach and attain

newer heights in passenger care comfort, reliability, safety and service. It

may also have many firsts to its credit. Its on time performance has been

consistently 97.5% and dispatch reliability touches 99.8%.

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3 AIRLINES AT A GLACE

INDIAN AIRLINES JET AIRWAYS SAHARA AIRLINE

Birth : 1st August

1953

5th May 1993 3rd Dec. 1993

Fleet : 57 aircrafts 27 aircrafts 14 aircrafts

Destinations : 58 30 13

Flight : 220 flights

daily

Over 155 flights daily 28 flights daily

Market Share : 58% 27% 24%

Achievements :

1. Grand Pacific Asia

Travel (PATA)

Award in Beijing

June 1997 for its

marketing

programme.

1. Blue Moon

Award in 1998

for service

excellence as

India’s best

domestic Airline

(given by

Citibank Diners

Club Members)

2. Global Award at

1. PATWA Award:

March 10th 1997.

Pacific Area Travel

Writers Association for

best domestic airline

for international

standards of service in

Indian sky.

2. WTM – World Travel

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the Travel Market

in 1998 for

quality service.

Market Global Award

in 1997 for its quality

of service within the

Indian Airline Industry.

CUSTOMER PERCEPTION

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Competitive changes are essential to all companies that engage in service

marketing. Many of the historic sources of the company’s superiority –

technology, innovation, economies of scale – allow companies to focus

their efforts internally and prosper. Today, internally focus is shifting to

external focus on the customer. Companies are acknowledging that unless

customer needs and their perceptions about ideal service are taken into

account in designing and delivering service, all the technical superiority

in the world will not bring success.

Therefore it is very important to understand the criteria customers use to

evaluate services. There are basically four primary factors which

influence the perceptions of the services by the customers as can be seen

in the diagram.

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FACTORS INFLUENCING PERCEPTION OF SERVICE

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SERVICE QUALITY

PERCEPTIONS OF SERVICE

VALUE CUSTOMER SATISFACTION

PRICEIMAGE

SERVICE ENCOUNTER

EVIDENCE OF SERVICE

Service encounters

From the customer’s point of view, the most vivid impression of service

occurs in the service encounter or the ‘moment of truth’ when the

customer interacts with the service firms. For example among the service

encounters, an airline’s customer experience are booking of ticket,

checking facility, in-flight comforts etc.

Evidence of service

Another major set of factors influencing the customer perceptions of

services is referred to as evidence of service. Because the services are

intangible, customers search for evidence of service in every interaction

they have with an organisation. The figure depicts the three major

categories of evidence as experienced by the customer – people, process

and physical evidence.

Contact employees Customer him/herself Other customer

Operational flow of activities Steps in process Flexibility Vs Standard Technology Vs Human

Tangible communication Service scope Guarantees Technology

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People

Process Physical Evidence

EVIDENCE OF SERVICE

Image

Beyond impressions from the immediate service encounter and

evaluations of service evidence, customer perceptions can be influenced

by the image and image and reputation of the organisation. Organisation

image can be defined as perceptions of the organisation reflected in the

associations held in customer’s memory. The association can be very

concrete such as history of operation ,number of flights per day, length

of time in business, ease of access or they can be less concrete and even

emotional such as excitement, trustworthiness, tradition, ingenuity, fun,

reliability.

Price

The price of the service can also greatly influence perceptions of quality,

satisfaction and value. Because services are intangible and often difficult

to judge before purchase, price is frequently relied on as a surrogate

indicator that will influence quality expectation and perceptions. The

price charged would also figure greatly into customer’s perception of

value, particularly following consumption of service as to whether the

benefits received were worth the cost of the service.

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CONCLUSION

The healthy competition of domestic airlines has set new trends in the

quality of service. In the monopolistic environment of Sahara Airlines

the quality and the desire to win over the constraints was totally dismal.

With the oncoming of Sahara Airlines there is change in the quality of

service and the pride of the job.

It is a matter of great significance that the airlines staff now care about

the passenger comfort and take pains to see that the flight are on time.

The high percentage 98% of on time service of Sahara Airlines is the

hallmark of their quality of service.

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RECOMMENDATIONS

1) With the oncoming of the Private Airlines on the country the

customer awareness and aspiration of quality of service has been

enhanced considerably. So Sahara airlines should emphasis on

providing more efficient services both on the ground and in the air.

2) The check-in time should be minimal. Wherever there is likely to

be long cues more counters should be opened.

3) The facility of valet services as introduced by Sahara Airlines

should be adopted by all airlines and it should be extended to all

classes.

4) Tele reservation and computerised check-in procedure should

mandatory for Sahara airlines.

5) The process of ticketing and cancellation should be made more

easy, smooth and as flawless as possible.

6) Delayed flight, which is a very painful experience for the travelers,

should be attended to as top priority because the main clientage is

businessmen and they are time bound.

7) There is a need to improve the quality of in-flight comfort

especially for a economy class by way of seat pitch, leg room,

quality and choice of food.

Customer grievance and prompt redressal should also be rated as top

priority as this will not only provide the necessary input and the feedback

but also would go a long way in improving the image of the airlines.

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BIBLIOGRAPHY

Annual Report of Jet Airways , Sahara Airlines and Indian Airlines Press Release of Jet Airways, Sahara Airlines and Indian Airlines. Publicity material, Brochures, pamphlets of Jet Airways, Sahara

Airlines and Indian Airlines. Web site; http://www.saharaairlines.com

http://www.jetairways.com http://www.nic.in/indian-ailines

Issues from Newspapers (Hindustan Times and Times of India)

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QUESTIONNAIRE

Name

Address

Age Gender

Occupation Ph. No.

1. What can you say about Sahara airlines services for

customers ?

a. Good c. Best

a. Better

1. What can you say about Sahara airlines services for staff ?

a. Good c. Best

a. Better

2. How would you rate safety measure taken by Sahara

airlines?

a. Good c. best

a. Better

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3. Are you satisfied with the fares applied on flights ?

a. yes b. no

4. Is the company charging high taxes from customers?

a. Yes b. No

5. Is the staff fully helping the customer ?

a. Yes b. No

6. Is the tickets of flights easily available ?

a. Yes b. no

7. What is the common problem face by the customers?

a. Unhealthy meals b. High charges

a. Delay flight d. Lost/damage

baggage

8. Customer’s overall rating to the Sahara airlines services.

a. Excellent c. so so

a. Very good d. dissatisfied

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