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Professional Certificate in Marketing

Professional Certificate in Marketing (Stakeholder Marketing)

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Professional Certificate in Marketing

Table of Contents
Audit Summary ............................................................................................................................................. 4 1.1. 1.2. Introduction ................................................................................................................................... 4 Customer Groups .......................................................................................................................... 4 Business Class Passengers (Return) ...................................................................................... 4 Economy Class Passengers (Return)..................................................................................... 4 Cargo Customers ................................................................................................................... 4

1.2.1. 1.2.2. 1.2.3. 1.3.

Marketing Mix .............................................................................................................................. 5 Product .................................................................................................................................. 5 Price ...................................................................................................................................... 5 Place ...................................................................................................................................... 5 Promotion .............................................................................................................................. 5 People.................................................................................................................................... 5 Process .................................................................................................................................. 5 Physical Evidence ................................................................................................................. 5

1.3.1. 1.3.2. 1.3.3. 1.3.4. 1.3.5. 1.3.6. 1.3.7. 1.4.

CRM Strategies ............................................................................................................................. 5

Task 2 ............................................................................................................................................................ 6 2.1. Executive Summary ........................................................................................................................... 6 2.2. SLA Key Customer Groups ............................................................................................................... 7 2.2.1. Business Class (Return) .............................................................................................................. 7 2.2.2. Economy Class (Return) ............................................................................................................. 7 2.2.3 Cargo Customers .......................................................................................................................... 7 2.3. Existing Marketing Mix ..................................................................................................................... 8 2.3.1. Product ........................................................................................................................................ 8 2.3.2. Price ............................................................................................................................................ 9 2.3.3. Place ............................................................................................................................................ 9 2.3.4. Promotion .................................................................................................................................. 10 2.3.5. People........................................................................................................................................ 10 2.3.6. Process ...................................................................................................................................... 11 2.3.7. Physical Evidence ..................................................................................................................... 11 2.4. Recommendations ............................................................................................................................ 11 2.4.1. Product ...................................................................................................................................... 11 2.4.2. Price .......................................................................................................................................... 12 2|Page

Professional Certificate in Marketing 2.4.3. Place .......................................................................................................................................... 12 2.4.4. Promotion .................................................................................................................................. 12 2.4.5. People........................................................................................................................................ 12 2.4.6. Process ...................................................................................................................................... 12 2.4.7. Physical Evidence ..................................................................................................................... 12 2.5. Measurement Tools .......................................................................................................................... 13 Task 3: Discussion Paper ............................................................................................................................ 15 3.1. Introduction ...................................................................................................................................... 15 3.2. Relationship Marketing, Customer Retention and Loyalty.............................................................. 15 3.3. Current Approach............................................................................................................................. 16 3.4. Recommendations ............................................................................................................................ 17 3.5. Costs and Benefits............................................................................................................................ 19 Appendix 1: Company Profile .................................................................................................................... 21 Appendix 2: Audit: Customer Group Identification ................................................................................... 23

List of Abbreviations
SLA: Sri Lankan Airlines CRM: Customer Relationship Management

BC: Business Class EC: Economy Class

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Audit Summary
1.1. Introduction
During the mass production age, the competition in the business world was about efficient production and capturing the new customers in the market. The 4P (product, price, place and promotion) was developed as a tool for marketing success and has been the unchallenged paradigm for marketing management (Gronroos, 1989). But in todays business context it is important to understand each and every customer separately due to heavy competition and customer retention. Mass Marketing Strategies has been emerged to Focused Marketing Strategies. According to the audit undertaken, (refer: Appendix Two) following are the selected 3 customer groups.

1.2.

Customer Groups

Identified 6 customer groups have been filtered down to 3 based on a customer group ranking done on key criterias such as Influence, Profitability Loyalty and Repetition. According to the ranking most profitable, loyal and repeating customer groups are, Business Class Passengers (Return) Economy Class Passengers (Return) Cargo Customers

1.2.1. Business Class Passengers (Return) Business Class (BC) passengers are the most valuable customers. This type of passengers uses BC service to fly to a destination and return back. This segment of customers represents the top class of the population. Such as top business personals, celebrities, politicians, etc. It is a prestige to have them fly on SLA. So SLA treats and provides extra special care and more facilities to all BC passengers.

1.2.2. Economy Class Passengers (Return) Economy Class (EC) Passengers are the main income generator of SLA. 90% of aircraft passengers are falling into this category. And also 65% of the sales come from this category. Since this segment represents the majority of the SLA customers, the organization has taken initiatives to facilitate its EC passengers in a way that its customers feel special.

1.2.3. Cargo Customers SLA provides air freight facilities to organizations and individuals. Many leading product manufacturers use this service to deliver their product line to the other end of the world. 13% of the airlines income comes from this category. Since the countrys leaders in manufacturing sector and importers use this facility to air freight their packages, retaining these customers are important to the organization.

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Professional Certificate in Marketing

1.3.
1.3.1.

Marketing Mix
Product: Airline packages and freight services are the products offered by SLA. To carry out its operations SLA has 17 air busses including two De Havilland Twin Otters (Air Taxis). SLA basically caters 3 packages. (Refer: Appendix 2) Price: SLA use different pricing strategies to different customer groups. Price differs from the class of the flight, destination and the time of the season. Place: Passengers and cargo customers can make the payments and buy tickets via online. Airline Passengers can purchase tickets from Bandaranaike International Airport or from its World Trade Center office. Promotion: SLA undertakes various promotional activities starting from print media to enewsletters. ATL and BTL are the promotional strategies used by the organization. (Refer: Task 2) People: SLA has taken measures to hire only the best people in the market and train them accordingly to matchup the needs and gain competitive advantage. Process: SLA offers the facility to book their flights via online. Due to its effective and efficient processes and maintenance SLA had been awarded ISO 14000:2000, ISO 9001:2008 and ISO 22000:2005. Physical Evidence: From the moment a passenger arrives to the airport they will get a unique experience from the seating arrangements to using its color schemes of SLA.

1.3.2.

1.3.3.

1.3.4.

1.3.5.

1.3.6.

1.3.7.

1.4.

CRM Strategies

Customer Relationship Management (CRM) is developing into a major element of corporate strategy for many organizations. It is also known by other terms such as relationship marketing and customer management. CRM is concerned with the creation, development and enhancement of individualized relationships with carefully targeted customers and customer groups, the desired result being to maximize the total customer lifetime value (Source: Mntyneva, 2001 ) Following are the CRM strategies use by SLA. FlySmiles: is the frequent flier program of SLA. This program was introduced to reward its frequent and loyal fliers. Ticket Refunds: Passengers can request refunds for their purchased tickets. Complaint Handling: SLA has dedicated personnel to handle customer complaints. Customers can also complain online via SLA cooperate website.

Though SLA has CRM strategies, researches had identified those strategies are not sufficient to retain and improve its customer base. Proposed new strategies are explained in Task 3.

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Professional Certificate in Marketing

Task 2
To:
Marketing Manager

From: Marketing Executive Subject: Organizations Relationship with its Customers Date: 25th November 2011

2.1. Executive Summary


Customers are the key aspect that drives any organization. In todays competitive business environment organizations just cannot survive by introducing the products and services to satisfy its customers. Organizations have to identify their customers separately and address them to delight their needs. Otherwise they will simply switch to another supplier. Following report will identifies the key customer groups of SLA and elaborates how each element of the marketing mix addresses those identified customers. The latter part of the report provides the recommendations for the marketing mix in order to strengthen its customer base and build a loyal customer base. This report also provides what are the measurement tools available to measure the success of the implemented changes.

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2.2. SLA Key Customer Groups


2.2.1. Business Class (Return) BC Passengers contributes 25% to the airlines revenue. This segment represents the top segment of the population. Their social status is very high and having a reputed position. These passengers are an asset to SLA. Because these socially reputed, high income people travel on SLA emphasize how premium the airline is. Due to their higher social status and the reputation, influencing power to the organization is so high as a segment and individually. These people not only influence the airline, but people. Many people follow them and try to be like them. If these people switch to another airline many people will follow their path. This will impact the company in a massive way. So retaining these customers are very important to the company. Level of loyalty is quite high on this customer segment. These customers travel on BC not just to get to a desired destination. They demand special treatment worthy of their status. 2.2.2. Economy Class (Return) Economy Class consists of 90% of the seats of an aircraft. The people who travel in this class are casual fliers. Passengers travel in EC because of two main reasons. First is they cant afford BC. And the other reason is they dont value the travel experience as BC passengers, other than reaching its destination with some care. These customers are not getting exclusive services like a BC passenger does. But SLA ensures its passengers journey to be a memorable experience. 65% of the airlines revenue generated from this segment of customers. Since this segment represents the majority of the customers and the revenue, it is important to retain and improve these customers. Majority of the economy class passengers falls into the category of middle income earners (SEC B and SEC C). Though they dont have a social status and influential power like business class passengers does, overall influential power as a group is certainly high. Loyalty level of these customers are not so high as the above mentioned group, their loyalty level is moderate. 2.2.3 Cargo Customers This segment consists of individuals and organizations who wish to airfreight its packages or product line to other end of the world. SLA plays a vital part in being the supply chain of many leading local and international brand manufacturers. This segment represents the corporate personals and large scale manufacturers. So the power to influence the airline is so high due to this factor. This segment contributes 13% of the Airlines revenue. Because of this factor SLA has high interest on them. Retaining these customers and improving the customer base of this segment is important to the airline. The company has high profitability on these customers. Service of the airline meets exactly the expectations of its customers so the level of loyalty is quite high. SLA takes every initiative to cope up these clients by implementing latest technology and highly trained personnel to handle their packages.

Level of power and influence of the identified customer groups are mapped on a Mendalows Matrix as follows. 7|Page

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Interest
Low High Economy Class (Return)

Power

Low Cargo Customers High

Business Class (Return)


(Source: Mendalows Matrix, 1991)

Table 1: Power Interest Matrix

2.3. Existing Marketing Mix


How each of the elements in marketing mix caters to satisfy the each of the identified customer groups are described in this chapter. 2.3.1. Product SLA caters different kind of products to the identified customer groups. Relevant product to the each customer group is described in-depth as follows. Business Class (Return) Passengers Since these are the customers that represent the prestige of SLA, it offers the most outstanding service for them. These passengers use business class not only as a medium of transportation. They want their journey to be more luxurious and hassle-free. And they demand a service worthy of their status. Travelling on business class represents the social status of them. So the service has to meet its standards. SLA offers BC travelers many more value added services other than the travelling experience. BC personal doesnt like stand on queues or to interact with the people who are not on their level. So SLA has a separate access routes for these passengers. They also have the access to Serandib Lounge (The VIP lounge of SLA). Business Class is having a different seating arrangement which gives the passengers more leg space and large comfortable seats. The foods they receive are the excellent and personalized. Economy Class (Return) Passengers EC Passengers are the passengers who use the service just to reach a desired destination for an affordable price. Their need is just getting to their destination safely with some care. SLA has designed Economy Class especially for these customers. These customers will not get any special facilities or personalized services. But SLA offers value added services such as serving a star class menu, etc. for attractive lower prices. Their seats are arranged in a way to accommodate more passengers. Due to this arrangement customers will not get larger leg space capacity like the business class passengers does. And the foods they receive are standardized.

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Professional Certificate in Marketing Cargo Customers This service is used by the customers who want to airfreight their packages. Each of their need is different. So SLA offers a range of products starting from General Freight to Valuables Delivery. Each of their customers expectation is to airfreight their packages to the desired destination on time safely. SLA always ensures its clients product security and reach in time by upgrading with the latest technology and recruiting the most experienced personnel.

2.3.2. Price Of all the aspects of the marketing mix, price is the one, which creates sales revenue- all others are costs. The price of an item is clearly an important determinant of the value of sales made. (Times100, 2011) SLA uses different pricing strategies to its different customer groups. How SLA has priced each of the customer groups are explained as follows. Business Class Passengers SLA uses a premium/ predatory pricing strategy for this segment of customers. These customers expectation is more value added services. So in customer point of view price is the key tool to measure quality. For the personalized services and other facilities they get, they are willing to pay and reserve a BC ticket whenever they fly. Price of a ticket varies with the season of the travel, destination. Minimum price of a BC ticket can be identified as Rs.75, 000 (Colombo to Chennai). Economy Class Passengers EC Flights are designed for the customers who are in SEC B and C. They are cost conscious about what they pay. SLA uses penetration pricing strategy which is charging lower price than the other competitors in order to get a competitive advantage. Minimum ticket price of a return ticket of an economy class ticket will be Rs.45, 000 (Colombo to Chennai). Cargo Customers SLA implement penetration and predatory both the strategies in cargo service. It uses Penetration pricing for general freight and predatory pricing for Valuable Transports. Airfreight prices vary with the product category and the weight of the package.

2.3.3. Place Place represents the distribution channels that an organization utilizes to convey its own physical products or services to the end users. (Sharma et al, 2010) The airlines hub is located at Bandaranaike International Airport (BIA) in Colombo. SLA operates its service in 52 destinations in 33 countries.

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Professional Certificate in Marketing Business Class Passengers Business Class Passengers have a busy lifestyle and they dont like to be on queues. For the convenience of them SLA offers 24 hour online ticket booking facility through its website.

Economy Class Passengers SLA has a wide network of travel agents registered island wide. People can buy their tickets through the travel agents. Cargo Customers People who wish to airfreight have to bring their packages to the office situated in BIA in Colombo. Registered customers can use SLA website to reserve the space.

2.3.4. Promotion SLA undertakes its promotional activities under the tagline of Youre our world. This tagline delivers the message that the customers are the most important aspect of the airline. And they will take utmost good care of its passengers till they reach their end destination. Business Class Passengers Company use Below the Line (BTL) as promoting Business Class Trips to its passengers. Such as advertising in Business and Travel Magazines, direct mailing. Economy Class Passengers SLA uses Above the Line (ATL) as promoting Economy Class Trips to its passengers. Company use TV, Radio and other printed media to promote Economy Class. Cargo Customers SLA currently wont use any promotional tools to promote this service.

2.3.5. People People play a vital role in airline industry. SLA has highly trained workforce to deliver its service effective and efficiently. Business Class Passengers: Employees of SLA who are interacting with Business Class Passengers are specially trained to match up their needs and wants. Economy Class Passengers: People who are dealing with Economy Class Passengers are trained in a way to deal with these customers in a friendlier manner. 10 | P a g e

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Cargo Customers: Employees in Cargo section have to deal with different kind of packages such as fragile items to dangerous items. For the safety and a quality service SLA only recruits the well experienced personal.

2.3.6. Process All the processes of SLA are accredited with ISO certification. So the quality of the service that a customer gets is guaranteed.

2.3.7. Physical Evidence Physical Evidence is an important aspect of service marketing mix. Business Class: Seats are arranged in a more spacious way that the passengers will get the ultimate comfort. Interior of the cabin is designed in a more attractive way. Economy Class: Passengers will not get a very spacious seating arrangement but the interior is designed in a more attractive way. Cargo Customers: Cargo collection and handover center is designed to facilitate their customers in a more luxurious and a convenient way.

2.4. Recommendations
2.4.1. Product More packages have to introduce for both passengers in BC and EC. Business Class passengers are more concerned about their health and food they eat. Currently SLA doesnt have an organic and healthy menu. Introducing a menu like this will add more value to its service delivery process. And also inflight entertainment activities have to be improved. Such as updating the database of on demand movies, adding more TV channels, etc. It is also recommended to acquire luxury airbuses such as A380 to facilitate more business class passengers. Seating arrangement of EC passengers have to be rearranged. Currently passengers who travel in economy class are getting a Compact seating arrangement. Rearranging the seating in a more spacious way will communicate the message that SLA cares not only Business Class Passengers but also them. And they will also feel they are getting the same standard of services the business class passengers does. By implementing these changes customers will be more satisfied and they will never leave the organization because of these unique services. 11 | P a g e

Professional Certificate in Marketing 2.4.2. Price Huge threat has been arise due to low cost carriers entering to the market. These carriers allow the passengers more attractive prices by implementing no frill strategies. Due to this pricing strategy, theres a trend in the market of economy class passengers switching to low cost carriers. So to face this threat and heavy competition SLA has to implement innovative pricing strategies to grab their market share without reducing its quality of the service.

2.4.3. Place Island wide cargo collection centers have to be established. Majority of the cargo customers are in the manufacturing industry. Currently these Customers will have to come all the way to BIA to handover their packages. By establishing collection centers in places like industrial zones will add convenience to the customers. Also SLA can come to an agreement with Sri Lanka Postal Service and Railway Authority to act as their authorized collection centers. This will open up a wide branch network to Cargo segment.

2.4.4. Promotion Overseas ad campaign of passenger travel segment of SLA has to be improved. SLA has to promote Sri Lanka as an attractive tourist destination along with promoting their brand. This will allow the SLA to increase its customer base and sales. To increase perception, Celebrity Endorsement also can be used as a promotional tool of Economy Class. Currently SLA wont undertake any promotional activities for the cargo customers. To raise awareness and to promote the brand, SLA has to start promotional activities more focusing on industry personals. 2.4.5. People All employees of SLA have to be trained in a way to handle the implemented latest technology and in a way to deal with every type of customers. Currently SLA provides overseas training to its employees. By establishing a training center accredited with International Aviation Training Academy in Sri Lanka will helps to reduce its costs on training and saves time.

2.4.6. Process By implementing latest technology in delivering its service process will helps the organization to deliver its services more efficiently and economically. One of the major concerns of SLA is more customer complaints are getting on inefficient service of travelling agents. So SLA has to train and advice the travelling agents to comply with the effectiveness.

2.4.7. Physical Evidence It is recommended to acquire more luxury airbuses such as A380s to facilitate the business Class people. Rearranging the seating arrangement and the interior of the airbus in a more spacious and attractive way for economy class passengers is also recommended. 12 | P a g e

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2.5. Measurement Tools


Like other departments. Marketing always request more budgets from me, but without the metrics in place to demonstrate the impact marketing has in financial terms to our external stakeholders (McDonald. M, 2010) In order to measure how success is they in implementing the proposed changes to the marketing mix, following are the qualitative and quantitative tools available.

Qualitative Tools
Customer Satisfaction Surveys Mystery Shopping Recall Tests Media Evaluation Depth Interviews Brand Awareness

Quantitative Tools
Return on Investment (ROI) Market Share Financial Analysis Customer Complaints Tracking Studies Customer Retention Level

Qualitative Tools Customer Satisfaction Surveys: This can be used to measure how satisfy the customers are with the product and the process of service delivery. By giving forms to fill by the passengers according to the experience they had and how satisfy are they with SLA services are the ways to measure the success. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intentions and to measure the likelihood to recommend the company and brand to others. (Marketing Management, Chapter 3) Mystery Shopping: This is another measure that can use by the company in the process of evaluating the changes of marketing mix. Organization can hire an external party for this process. In this process the hired personal comes to organization as an ordinary customer and evaluate the service, people, process and place according to the experience they had. Depth Interviews: Company can undertake depth interviews to analyze and evaluate the attitudes and perception of loyal customers. Brand Awareness: This is the measure of market members to recognize/ recall a brand under different conditions, most fundamentally the brand name itself. (Davis et al, 2009)

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Professional Certificate in Marketing Quantitative Tools ROI: ROI contrasts a direct financial return with the financial cost of achieving that return. This measure is useful when assessing a specific marketing investment, provided the timeframe is extended to capture the full return. (Ambler, 2003) Customer Retention: Analyzing customer retention is an important process that can enhance the customer equity of a firm (Thomas, 2011) By analyzing the level of customer retention before and after the implementation, an organization can measure their success in implementing the changes. Financial Analysis: SLA can measure the success of the implemented changes by analyzing the sales and profit figures. By checking the figures of sales and profit before and after the implementation, company can get an idea how success are the implemented changes Customer Complaints: By analyzing the number of customer complaints SLA receives before and after the implemented changes is another tool to measure success.

Tracking Studies: SLA can use tracking studies such as observing the hits and clicks receive for the website. Checking the numbers of old website and the newly designed website, organization can measure how success they are in addressing that matter. (Word Count: 2700)

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Professional Certificate in Marketing

Task 3: Discussion Paper


3.1. Introduction
The concept of Customer Relationship Management (CRM) has become a vital element in modern organizations. CRM helps to reduce the customer churn and improve its customer base. This discussion paper provides a basic idea of the concept of CRM and how it is applicable to the Sri Lankan Airlines (SLA).

3.2. Relationship Marketing, Customer Retention and Loyalty


According to Carson Research 2011, It costs up to twenty times as much to attract new customers as it costs to retain the existing customers. Retaining existing customers are important than attracting potential customers to a business. The first and foremost task that a company has to do in order retain and attract new customers is by delivering products and services that meets customer expectations. Customer complaints are a tool to measure up the success in delivery of services. Customer dissatisfaction level cannot be measured purely based on the complaints an organization receive. Every customer who had a negative experience will not come and complain. They are likely to switch to an alternative or stop purchasing the brand. Losing those customers is not the only cost a firm will have to face. According to a research done by Technical Assistance Research Program (TARP), On average customer who had an unpleasant experience with a business will tell 9-10 other people and about 13% will tell more than 20 people. Negative Word of Mouth is not good to an organization. This will directly affect the brand image. Getting corrective actions to minimize customer dissatisfaction level are important. This is where Customer Relationship Management (CRM) comes to play. A primary motivation for a firm to implement CRM applications is to track customer behavior to gain insight into customer tastes and evolving needs. By organizing and using information, firms can design and develop better products and services. (Devenport et al, 2001) Though changing from Transactional Marketing strategy and implementing CRM strategies will incur a company a huge cost in short term, it will pay back the organization in long term with improved sales, less customer complaints, large wallet share and a loyal customer base. Ultimately CRM will help a company to get prospects to become partners. Figure 1 shows the Ladder of Loyalty.

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Figure 1: Loyalty Ladder

(Source: Emeraldinsight, 2011)

3.3. Current Approach


Current CRM Strategies implemented by SLA is described as follows.
FlySmiles

FlySmile is designed to reward the frequent fliers/ loyal customers of SLA. For every mile they travel, they will earn a travel bonus point which can be later used to purchase air tickets free of charge. This program will also offer a range of benefits to its customers. Flysimle membership has three categories blue, silver and gold. Blue card is offered at the point of registering to the program. Benefits customers will get by enrolling to this program are listed down as follows.

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Professional Certificate in Marketing (Source: Flysmiles, 2011)


Table2: Flysimile Benefits

This program transforms the general customers in to loyal customers. They will ultimately become a partner of the organization and recommends the brand as ambassadors. FlySmile is the only strong CRM strategy currently implemented by SLA to retain customer churn and improve customer loyalty. Complaint Handling

Customer complaint is the point where an organization can measure up how successful are they in delivering its products and services. SLA has dedicated personnel to handle customer complaints. Customers can also complaint online via SLA cooperate website. Proper actions will be taken and communicate to the customer who complained and may be compensated properly if the customer has made any losses due to the event which he/she made the complaint. These customers will see SLA as a responsible and customer friendly organization. The customer may straight to alleviate to be an advocate of the organization not to mention the life time customer ship of him/her. Ticket Refunds

SLA allows the customers to request for ticket refunds for their un-flown tickets. By filling up a form physically or online customers can request this service. The refund request will be processed by SLA within 15 working days. Customers have the option of crediting the money back to their accounts or to switch with another ticket. By doing this customers will be delighted and stays with the organization during the lifetime of his/her. They will also spread positive word of mouth about the organization. This will again act as an unintentional promotional tool

3.4. Recommendations
Though the SLA has CRM strategies implemented to its processes, those strategies are alone not enough to face the current competition and retain customer churn. Following are the recommendations provided to improve customer satisfaction and reduce customer churn.
Establishing a Personalized Passenger Information System

According to Raymond et al (2011), the typical airline boarding process begins with passengers arrive the departure lounge and wait for boarding. Passengers would be allowed to board only after the row numbers of their seats are called out. Additionally passengers typically want to know whether a flight will leave on time, cannot get these information without getting to the airport. This will simply leads to customer frustration. Technology can be used to minimize customer frustration. SLA can establish a personalized passenger information system. By sending SMS notifications such as departure time of his/her flight before 24hours, flight delays or cancellations, security line status to customer mobile phones will add more value to SLA 17 | P a g e

Professional Certificate in Marketing service. This makes the customer life easy. Ultimately this will result in more customer satisfaction and less frustration. The company will have to install new servers and technological items in implementing this system. Introduce a Cargo Loyalty Program

Currently cargo customers are not getting any special treatment or there are no promotional activities focusing on them. By introducing a loyalty program like FlySmile will delight the cargo customers. The loyalty program will have three tiers Silver, Gold and Platinum. Silver card will be offered at the moment of enrolling the program and the platinum will be offered to the top level of customers This requires a higher level of technology involvement and cost to the organization. Refocus Frequent-flier Program (Flysmile)

Though this program will attract more customers and helps to retain customer churn, there are some major loopholes that need to be fixed. Members of Flysmile will also have the option of purchasing Flysmile points and also can earn points from Flysmile partners (Dialog Axiata, Siddahlepa, Hatton National Bank, Etihad Airways, Malaysian Airlines, Standard Charted Bank and Taj Resorts).

(Source: Flysmiles, 2011) Because of this SLA cannot identify its most valuable customers based on the air miles travelled. More point purchased or earned person will benefit rather than frequent fliers. So the program needs to be refocused on identifying most loyal customer basis and reward them accordingly.

Introducing a toll-free number and customer identification

Introducing a toll-free number will benefit both the Airline and the Customer. With the introduction of a toll-free number, customers can contact SLA anytime they want without having a cost for their calls. Sometimes customers who call for airline to get information or reserve a ticket have to be on hold for a long time due to the busyness. So when passengers have to bear a huge cost (especially international callers) by being online. This leads to customer dissatisfaction. Establishing a toll-free number will minimize this dissatisfaction level. Though the cost of every call has to bear by the firm, it will enrich the customer satisfaction. SLA can also use this toll-free number as a marketing tool to promote their brand. This requires a higher degree of technological involvement in areas such as networking and telecommunication, etc. 18 | P a g e

Professional Certificate in Marketing As a sub initiative SLA can use customer identification system for calls. Customer Identification system means when every time a customer calls they are addressed by their name based on the passed records. This will make customers feel they are remembered and important.

Train Front Line Staff

Airlines need to instill a service mentality in their employees, empowering them with a complete view of the customer and the clearly articulating the employees role in the CRM strategy. (IBM, 2002) People play a major role in Airline Industry. From the moment a passenger comes to an airport to getting aboard employees of the airline are the one who handles and take care of them. Some customers need special attention, some dont. So SLA has to train the employees who are dealing with customers in a way to handle every type of customers. Also the customers need to train to use the implemented latest technologies. This will incur a cost to the organization.

3.5. Costs and Benefits


Following will describe the Cost and benefit to the organization if the proposed strategies have been e implemented. Costs

1) Establishing Personalized Passenger Information System has a huge cost incurring in technological investment. To introduce this system SLA will have to purchase new servers, telecommunication tools and also to manage the system SLA will have to recruit new people. (Rs.8,000,000) 2) Introducing a Loyalty program and refocusing Flysmile: SLA will have to outsource this 3) Redesigning Cargo Website has a less cost incurred compared to the other recommended changes. SLA will have to consult professional web developing agency and also will have to purchase new web servers. 4) Introducing a toll-free number requires high degree of technological involvement in the areas of networking, telecommunication etc. Also this recommendation has a high cost factor involved in short run which may lead SLA to look for funds outside the organization in terms or a corporate loan. (Rs.1,000,000) 5) To Train Front Line Staff the organization may have to hire industry professionals and the employees have to undergo on the job training as well as off the job training programs. Theres a huge financial cost as well as people cost banded with this recommendation. (Rs.5,000,000)

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Professional Certificate in Marketing Benefits 1) Enhanced Customer satisfaction and retention: By implementing these CRM strategies the customers will be satisfied and ultimately become advocates of the organization. This will help SLA to build good reputation in the market place. 2) Improved profitability and revenue: CRM strategies will helps to improve profitability and the revenue of the organization by improved new customer base, focusing on the most profitable customers and dealing with the less profitable in more cost effective ways. 3) Improved overall efficiency: By implementing technological aspects and with the trained staff, overall efficiency of the airline will be increase. This may lead to a reduction in operational costs. 4) Brand Uniqueness: Implementing methods such as toll-free numbers will enhances the brand uniqueness of SLA.

Conclusion It costs up to twenty times as much to attract new customers as it costs to retain the existing customers. So in order to retain and improve an organizations customer base, CRM has strategies to be implemented. Flysmile (Frequent Flyer) Program, Complaint handling and ticket refund offerings are the CRM Strategies practiced by SLA. In order to face the growing competition, organizations have to always look one step ahead than its competitors. So it is recommended to implement some new strategies for SLA. Establishing a personalized passenger information system, refocusing Flysmile program to identify and reward its loyal customers and introducing a new loyalty program for cargo customers are the recommended CRM strategies for the SLA.

(Word Count: 1648)

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Appendix 1: Company Profile


Background
SriLankan Airlines (SLA) is the national airline of Sri Lanka. The airlines hub is located at Bandaranaike International Airport in Colombo. SLA carryout its operates in 52 destinations of global route in 33 countries. The airline currently own 19 aircrafts including 2 De Havilland Twin Otters also known as Sea Planes for its domestic Air Taxi operation. SLA has been received several awards for its world class service and in-flight comfort. Government of Sri Lanka owns 51.05% of SLA and Emirates Airline owns 43.63%, other 5.32% is owned by the Employees of SLA. The organization reported annual turnover of Rs.63, 358.45 million for the year ended 31st march 2010.

History SLA was originally launched as Airlanka in 1972 under the wing of government. Then it was rebranded in July 1999 after privatizing and coming in to a strategic partnership with Emirates Airlines. During the operation of 30 years, SriLankan Airlines had to face crucial events such as terrorist attacks and global financial crisis. But the organization was managed to survive and overtake all these challenges due to the effective performances and strategies implemented by the organization, Vision
To be the most preferred airline in Asia

Mission
We are in the air transportation business. We provide our customers with a reliable and pleasant travel experience. We provide our business partners with a variety of innovative, professional and mutually profitable services. We meet shareholder expectations of profitably marketing Sri Lanka and contributing towards the well-being of society. We are a competent, proactive and diligent team. Our contribution is recognized and rewarded. Products International Flights: SLA offers Business Class and Economy Class trips to the international travellers. Domestic Flights: Air Taxi is the latest addition to SLA. Passengers can air travel within the country with this service. SLA Cargo: Organizations and individuals can use this service to airfreight their packages using this service. SLA Engineering: This is the aircraft maintenance service offered by SLA.

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Professional Certificate in Marketing Market Share

The international Air Transport Association (IATA) reported that the worst economic recession in 80 years saw revenues drop by $81 billion and losses of almost $10 billion in 2009 throughout the air transport industry Though the global airline industry is in crisis, tourism industry of Sri Lanka is currently having a boom due to more tourists are coming into the country because of the end in civil war which has been lasted for the past 30 years. Due to this factor SLA is getting more revenue and on other hand experiencing heavy competition. There is only one locally owned airline in Sri Lanka other than SLA. Though there are only two operators in SLA, there are 7 other international airlines operates in Sri Lanka. SLA is currently ranked in the 3rd place.
90000 80000 70000 60000 50000 40000 30000 20000 10000 0

Revenue (Rs. Mn)


Revenue

Chairman and Board of Directors Chief Executive Officer Head of Information Technology

Market Position SLA has positioned itself in the broad market segment. How SLA is differentiating to its competitors is, the company is more focused on creating customer value and convenience. However SLA is currently in the position of expanding its airline operations and repositioning itself on more premium market segments. Organizational Structure Organization is basically controlled under a Chief Executive Officer (CEO). CEO directly reports to the Chairman and Board of Directors. SLA has managers appointed to each of its sections. These managers directly reports to CEO.

Head of Finance

Head of Commercial

Head of Cargo

Head of HR

Head of Service Delicery

Head of Engineering

Head of Flight Operations

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Professional Certificate in Marketing

Appendix 2: Audit: Customer Group Identification


Sri Lankan Airlines (SLA) is in the domestic and international transport service. SLA currently carries out its operations in 33 countries (52 destinations) and has a total of 17 air busses including two De Havilland Twin Otters (Air Taxis) for domestic operations. Airline Industry had identified that segmenting the customer based on Air-miles is inadequate. With the growing competition and adaptation of CRM strategies it is essential to identify its customers in a more value added basis. Following is the audit carried out for SLA to identify its key customer groups. SLA customers can be basically categorize into 4 groups
One Way Business Class Passengers Return

One Way SLA Customer Groups Economy Class Passengers Return Air Taxi Passengers

Cargo Customers

(Source: Compiled by Author) 1) Business Class Passengers Business Class passengers are the most valuable customers of SLA. These customers are treated with an extra special care compared to the other customers. They are getting more leg space, excellent food and more comfortable facilities. There are only about 18 seats available per aircraft for these passengers. This segment can be divided into two sub categories. One way: This type of service is used by the passengers who fly to a destination and wouldnt return back to the departure location. i.e.: Tourists, Business Clients Return: This service is used by the passengers who reach to a destination and return back to the departure location.

2) Economy Class Passengers 90% of aircraft passengers are falling into this category. These passengers will not get any unique sort of service and facilities like business class passengers do. But SLA takes good care of their each and every passenger. This segment also can be divided into two sub categories as above. One way Return 23 | P a g e

Professional Certificate in Marketing

3) Air Taxi Passengers Air Taxi is the latest addition to SLA. With the Air Taxi service passengers can travel around the country on air. This will bring a unique experience to the domestic traveler. Air Taxi service will provide business and leisure travelers with the advantage of reaching their destinations in less than 85% of the time spent on surface travel. 4) Cargo Customers SLA provides air freight facilities to organizations and individuals. Many leading product manufacturers use this service to deliver their product line to the other end of the world. Its Cargo freighter aircrafts has the capacity to handle a payload of approximately 18 tons each. Customers can freight out-sized cargo, livestock and perishable goods using this service.

Customer Group Ranking


In order to identify the 3 most important customers from the findings, points had been allocated to each customer group based on 4 criterias (Influence, Profitability, Loyalty and Repetition Level)

Type of Customer
1. Business Class (One Way) 2. Business Class (Return) 3. Economy Class (One Way) 4. Economy Class (Return) 5. Air Taxi Passengers 6. Cargo Customers Passengers

Influence Profitability Loyalty


4 Passengers 5 Passengers 4 Passengers 4 2 4 5 4 5 4 3 4 4 3 5 5 5 4

Repetition
3 5 3 5 3

Total
16 20 14 18 12

4 17 (Source: Lecture Notes)

According to the ranking following are the identified 3 key customer groups Business Class Passengers (Return) Economy Class Passengers (Return) Cargo Customers

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Existing Marketing Mix


Product Airline packages and freight services are the products offered by SLA. To carry out its operations SLA has 17 air busses including two De Havilland Twin Otters (Air Taxis). SLA basically cater 3 packages Price SLA use different pricing strategies to different product categories and customer groups. Ticket prices differ from the class of the flight, destination and the time of the season. Generally the prices are bit higher in peak period of the year and lower in off peak season. Cargo prices varies with the weight and the level of complexity of its package (Perishability, Livestock, Valuable items and level of dangerousness) Place The Airlines hub is located at Bandaranaike International Airport in Colombo, providing convenient connections to its global route network of 52 destinations in 33 countries in Europe, Middle East, South Asia, Southeast Asia, Far East, North America and Australia (Source: Srilankan,2011) Passengers and cargo customers can make the payments and buy tickets via online. Airline Passengers can purchase tickets from Bandaranayake International Airport or from its World Trade Center office. Customers can purchase tickets also from any authorized travel agent who is closer to him/her. Promotion SLA undertakes various promotional activities starting from print media to e-newsletters. In order to promote more customers to fly with SLA, it designs attractive, economical and innovative packages according to the season. Some of the ongoing promotional activities are listed down. Holiday Packages Business Class 10% money back Hot Seats Business Class Package Economy Class Package Cargo Packages

People People play a vital role in airline industry. In airline service 85% of the time people are the ones who interact with customers. Especially the global corporate travelers travel in Business class so they expect above average star treatment from the cabin crew and the customer cared staff. Therefore SLA has taken measures to hire only the best people in the market and train them accordingly to matchup the needs and gain competitive advantage. 25 | P a g e

Professional Certificate in Marketing Process To ease up the busy lifestyle of customers SLA offers the facility to book their flights via online using their pcs and laptops. Also the customers have the option of book their flights through their travel agent. After booking their flights passengers can enjoy their journey in a luxurious way. SLA ensures all its passengers to make their journey a memorable. SLA has been awarded ISO 14000:2004 certification for best environmental practices, ISO 9001:2008 for Quality Management Systems and ISO 22000:2005 for Food Safety Management and Hygiene. Registered users of Air Freight can make reservations online and non-registered/ other personnel can request its service through a SLA Cargo Officer. Customers can also track their package status online with the advanced automated tracking system of SLA. Physical Evidence All passengers of SLA will get a unique sort of an experience throughout its journey. From the moment passengers arrives to the airport they are treated by the well trained cabin crew and airhostess. All airbuses are equipped with latest technological items to facilitate its passengers. Key aspects represents the physical evidence of SLA are as follows

SLA Logo: SLA uses a peacock as their brand logo. Whenever someone sees the peacock it reminds the customer about SLA. Seating Arrangement: SLA seating arrangement is different to the other airlines. It gives more leg space and more comfortable atmosphere to the passenger. Use of Color: SLA uses a unique color scheme that represents the SLA brand. All airbus seats are in peacock blue and the airhostess uniform is in peacock green.

CRM Strategies
Strategies implemented by SLA are described as follows.

FlySmiles: is the frequent flier program of SLA. This was established in 2008 by SLA as a CRM initiative. This program was introduced to reward its frequent and loyal fliers. Customers are getting reward points according to the miles they flown. Complaint Handling: SLA has dedicated personnel to handle customer complaints. Customers can also complain online via SLA cooperate website. Ticket Refunds: Passengers can request refunds for their purchased tickets. Customers are having the option of getting their money back or transfer it to buy another ticket.

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List of References

12manage (2011) Mendalow's Matrix, [online] Available at: http://www.12manage.com/images/picture_stakeholder_mapping_power_interest_matrix.gif [Accessed: 18th October 2011]. Ambler, T (2003). Marketing and the Bottom Line, 2nd ed., London: FT Prentice-Hall. Brooks, N. and Simkin, L. (2011) Measuring marketing effectiveness, The Marketing Review, 11(1), p.8-10. Businesslink (2011) Customer relationship management, [online] Available at: http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075422939&type=RESOURCES [Accessed: 26th October 2011]. Davis et al. (2009). Measuring brand equity for logistics services. The international Journal of Logistics Management, 20(2), 201-212 du (2011) Services Marketing Mix in Library and Information Centres, [online] Available http://crl.du.ac.in/ical09/papers/index_files/ical-78_246_697_1_RV.pdf [Accessed: 5th November]. ebrc (2011) Managing CRM Related Competences, [online] Available at: http://www.ebrc.fi/kuvat/261_266.pdf [Accessed: 15th October 2011]. emeraldinsight (2011) Ladder of Loyalty . [image online] Available at: http://www.emeraldinsight.com/content_images/fig/1080040607002.png [Accessed: 1st of November 2011]. Flysmiles (2011) Benefits For All Member Categories, [online] Available at: http://www.flysmiles.com/aboutflysmiles/benefits.html [Accessed: 14th December 2011]. fornell et al. (2005) Why do customer relationship management application affect customer satisfaction, JSTOR, 69(04), p.204. IBM (2011) The future of CRM in the airline industry, [online] Available at: http://www05.ibm.com/innovation/fi/pdf/highlights/integration/crm_airline.pdf [Accessed: 2nd November 2011]. Kotler, P. (2005) Marketing Management, 13th ed. Boston: Pearson, p.216. McDonald, M. (2010). A brief review of marketing accountability, and a research agenda. Journal of Business & Industrial Marketing, 25(5), 383-394. Srilankan (2011) Business Class, [online] Available at: http://www.srilankan.aero/fly-with-srilankan/businessclass.html [Accessed: 14th December 2011]. Srilankancargo (2011) Products, [online] Available at: http://www.srilankancargo.com/general/products.htm [Accessed: 15th November 2011]. Surrey (2011) eAirlines: Strategic and tactical use of ICTs in the airline industry, [online] Available at: http://epubs.surrey.ac.uk/1120/1/fulltext.pdf [Accessed: 20th October 2011] Swdis (2011) Airline Passenger Information Systems and Process Improvements, [online] Available at: http://www.swdsi.org/swdsi06/Proceedings06/Papers/MIS12.pdf [Accessed: 3rd November].

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thetimes100 (2011) Marketing mix, [online] Available at: http://www.thetimes100.co.uk/downloads/theory/marketing_mix_(price,_place,_promotion,_product).pdf [Accessed: 12th November 2011]. Thomas. J. (2001). A methodology for linking customer acquisition to customer retention. Journal of Marketing Research, 38, 262-26

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I confirm that in forwarding this assessment for marketing, I understand and have applied the CIM policies relating to word count, plagiarism and collusion for all tasks. This assessment is the result of my own independent work/investigation except where otherwise stated. Other sources are acknowledged in the body of the text and/or a bibliography is appended and Harvard Referencing has been used. I have not shared my work with other candidates. I further confirm that I have submitted an electronic copy of this assessment to CIM accordance with the regulation.

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