The aviation industry has assumed a competitive character premised on the modern managerial concepts, scientific applications and increased globalization. The nature of competition has compelled airlines in the industries to position themselves strategically, employing models that enhance their competitive abilities. It is the contention of this paper that Porter’s generic competitive advantage strategy can be applied in relation to the development of a brand image that would position the company ahead in the competitive airline industry. This paper shall discuss how the competitive strategy can be employed in line with the concept of branding and the associated benefits that would accrue as a consequence.
Porter’s Generic Competitive Strategy
In the context of a globally competitive atmosphere that entertains minimal errors and flaws, companies have been compelled into adopting Porter’s competitive strategy in gaining a strategic advantage that would lead to the ultimate profiteering of the company in the global competitive environment. Porter’s generic competitive advantage is premised on three main factors. These avail to the company a tripartite approach that can either be pursued each in isolation and in exclusivity or all the three mutually depending on the interests and plans of the company. The three approaches involve the use of cost leadership, differentiation and or focus. In cost leadership, the firm employs the strategy of low costs. Low costing is a complex process that on the surface is manifested only in low pricing of commodities. In the airline context, a cost leadership approach would mean the firm offers the lowest rates of fares as compared to the rates charged by other firms while still maintain the service quality and conveniences accompanying the products or services.
Often this approach involves a meticulous planning and execution of the service delivery within the airline company. The best approach to this end would entail the reduction of operational costs to the bare minimum. This implies that the entire supply chain of the business is looked into and redesigned with the intention of minimising costs at all the levels of operations. Often the reduced costs are transferred to the pricing by effecting a net price cut on the fares. This strategy has its advantages and disadvantages. While it would reduce the prices of the products and services, it often has the unintended consequence of compromising the quality of commodities and services. A brand image building strategy would at the very least want to hurt the overall quality of the firm’s commodities and services.
Secondly, Porter’s competitive strategy entertains the application of the focus approach. In focus approach, the objective of the firm is to ensure it they identify a certain and definite market and understand all the dynamics operational in this market. To this extent, the company would then tailor make its products specifically for the target market to the exclusion of the other consumers in the market. This strategy is often predicated on a complex application of specialization and customer needs satisfaction. It enables the firm to capture a definite market segment and offer its services without threat from any market players. It works on customer loyalty and absolute customer satisfaction.
However, this strategy is limiting and inapplicable in the airline industry. The reasons can be explained in the following observations. First, the dynamics in the airline industry are such that no single market segment can comfortably fit into the structures and models of the airline companies. This is to say that an airline company cannot identify one definite market segment and tailor make its products to the satisfaction of the target segment and to the attendant exclusion of other players.
In addition, the market in its stratification cannot entertain exclusively tailored products for the simple reason that the fares would be too high for any average consumer. Airlines suffice for provision of transportation services which in every sense does not fall under luxurious services. For that reason the numbers of passengers in the market who would be ready to part with too much just for the received customer satisfaction is minimal. This, therefore, leaves the airlines with the final option, that is, differentiation.
Differentiation refers to the process in which a product is further processed in different mixes and characters in appreciation of the diverse needs of the market. This approach requires the company to carry out market research and analysis and note the different tastes and preferences of customers. These preferences are then factored in the process of service production. Differentiation allows the application of price discrimination, flexible service terms and conditions and private predetermined arrangement. This approach is the most realistic in enabling brand image building predicated on Porter’s competitive models.
Brand image refers to the attitudes, feelings, loyalty and reactions a market attributes to a product. The building of a brand image is tedious, time consuming and complicated. For starters, the firm must understand the dynamics in play in the market. Often, the best approach entails the division of the market into segments. The airline firm has to identify various categories of the customers in relation to their preferences and tastes. Often, the process consumes time and resources. It requires that the company carry out feedback, monitor service delivery, examine contents of complaints, look into requests and suggestions from clients, conduct market surveys, analyse the components and characters of its clients base, among other things. This enables the reception of the market expectations, disappointments, needs, feelings, attitudes, among other operant factors. The centrality of this process lies in the fact that it informs the decision models and the strategy to be employed. After a thorough and comprehensive collection of information, the same should be synthesised, analysed and processed into useful decisions and strategies.
In addition, it should be noted that product differentiation can only be pursued in recognition of the profitable outcomes. In the event a simulation of scenarios reflects a net loss on a given product, it is duly abandoned and its implementation stopped forthwith.
However, the implementation of differentiation has the overall effect of inclusion and sensitivity. The market needs would effectively be addressed by the different categories of products developed. In addition, the company needs to develop a feedback mechanism process in which it collects the clients’ comments, requests, complaints and suggestions and seeks to address the issues as and when they arise. This enables the company achieve customer loyalty and attachment to the company. In other words, the brand image would have been built. As has been illustrated, brand image is not about advertisement, it does not envision endorsements on celebrities or related corporate social responsibilities.
On the contrary, brand image entails meeting the customers’ wants and needs effectively, timely, conveniently and with sensitivity to economic abilities that often differ. In the long run, all the market segments would be associated with the company as their needs are often taken care of. In addition, the overall impact is that the client base would grow through the persuasion and referrals given to potential clients by the current crop of clients. This is one major benefit of brand image development. The company is able to expand and develop without incurring additional costs of establishment, marketing and product initiation. Instead, with a developed brand image, the company only develops its products more, addresses the additional client requirements and seeks to retain the already established markets.
A good example of a company that has developed a positive brand through a diversified approach in production and services offered in the Southwest Airlines. In the Southwest Airlines, the company offers the following alternatives to different groups of passengers depending on their interests. Early bird check in services which allows passengers to check in electronically. The derived advantages to the passengers are a choice of foods, seat preference and luggage arrangements, among other reservations. It also offers Wi-Fi hotspot for passengers, mobile access options for passengers who may want to stay online when on air, allows for the travelling with vaccinated cats and dogs and offers a comprehensive merchandise handling and carriage system. These diversifications has enabled it penetrate the market and establish customer loyalty and affinity through a positive brand image. Consequently, the company has been able to leverage on its brand image maintaining an effective and commanding presence especially in Southern parts of America.
Another example could be cited in Delta Airlines. Delta Airlines has taken the giant step at diversification and differentiation through its special travel needs category. In this, Delta offers services such as accommodative and friendly children travel services, elaborate travellers with disabilities options, passenger with pets services, lower rates for passengers attending funerals, extra space for passengers requiring additional space, medical emergencies among others. Through that, the company is able to tap from the diverse market structure and develop a brand image in the eyes of consumers. This has enabled Delta Airlines realise positive revenues all the year round indicating that it appeals to all seasons travellers and cannot be limited to one or two segments only. This brand image has enabled Delta compete favourably against other market players.
In the long run, brand development that employs differentiation positions the firm favourably in the market enabling it maximize income earning in the short term and develops a product loyalty that would suffice for long term continuity in sales. Brand image has the overall ability to cushion the firm from market shocks associated with fluctuations in the various targeted market segments.
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