Group work (1)

1
GROUP ASSIGNMENT GROUP 0005D  MARKETING
MANAGEMENT  (BUS 5112-01- AY 2023-
T1) UNIVERSITY OF THE PEOPLE INSTRUCTOR DR.
SANTHOSH KUMAR 19th October, 2022.
2
Topic

• Customer loyalty
• Prepared by
• AUNG ZAW MOE IFEYINWA OKWUOSA

3
introduction

• Customer loyalty is the act of choosing one
  companys products and services consistently over
  its competitors (Chambers, 2022)
• Customer loyalty is a customer's willingness to
  repeatedly return to a company to conduct
  business (Bernazzani, 2021).
• Customer loyalty is a customers likelihood of
  doing repeat business with you (Peek, 2022).
• Customer loyalty simply means the difference
  between a one-time sale and a customer who comes
  back to you potentially for a long period of
  time.
• There are several reasons why a customer will
  always return and these are based on some factors
  such as customer satisfaction, trust, sales
  promotion, price of a product or services etc.

4
objectives

• This presentation covers the following concepts
  below using AIR KBZ as case study
• Analyze marketing and implementation strategy.
• Explain importance of CUSTOMER Retention.
• Factors that determine prices of Airfares
• Strategic benefits of brand loyalty that seem
  appropriate.
• Key factors that influence customer loyalty after
  the first purchase.

5
Analyzing current marketing and implementation
strategy

• The airline market can be divided into three
  parts
• Airline company
• Distributors
• Customers
• Distributors
• These are all Third-party Companies that resell
  Travel Products to either the customers (OTAS),
  Or to Other Distributors (WHOLESALERS).
  Distribution In Travel Is Fully Controlled By
  Global Distribution Systems (GDSS) These are
  International Companies that Established An
  Oligopoly On The Travel Market, GDSS are Central
  Point Of Connection Between Airlines And
  Distributors.
• CUSTOMERS
• These are buyers of travel products.
  Traditionally these travelers are divided into
  two segments. They are
• LEISURE AND
• BUSINESS

6

• LEISURE TRAVELERS
• These Are The Largest Channel Of Sales. The
  Leisure Traveler Segment Is Budget-conscious, So
  Customers Are Primarily Interested In Optimal
  Pricing.
• BUSINESS/CORPORATE TRAVELERS
• These Are Individuals Or A Group People, That
  Travel Mainly For Business. Their Main Priority
  Is In getting Optimal Route Choice And Comfort,
  So High Service Class Is Preferred. Corporate
  travelers occupy A Much Smaller Part Of Flights,
  But They Bring More Total Revenue Compared To
  Leisure Travel, Especially In Traditional
  Airlines That Arent Practicing Low-cost
  Approaches.
• Airlines have lots of opportunities to target
  different customer segments through direct and
  indirect channels. Here are some key airline
  marketing strategies
• Considering that an airline ticket is a tangible
  thing (at least a paper one), the rest of the
  trip is service.
• The price offer is always dynamic depending on
  the current demand, and how long before the
  departure tickets are sold.
• A flight destination and country is a marketing
  opportunity for the carrier
• The target market are travelers. Therefore, how
  airlines sell their flights make a big difference
  on direct channel (eg. Reservation on an airline
  website/app), or via a distributor. Direct sales
  bring an airline a lot of benefits, like customer
  data and the ability to market products using
  this data. Distribution using online travel
  agencies and global distribution systems are
  entirely different because, commissions are paid
  as a percent of a fare/service price.

7
Challenges facing Airline Marketing strategies.

• Air line business a services oriented
  organization and it cost a lot of money to
  advertise them since you cant touch, taste, or
  smell them, nor can they be explained in two
  words
• Tickets and ancillaries have expiry date.
• The price on the same ticket fluctuates due to
  various factors, so there is no constant value
  proposed to the user.
• Airlines operate across the globe and that
  presents difficulties because different countries
  have their different policy regulations so
  carriers appear to be vulnerable to political,
  economic, geosocial, and climate factors, all of
  which may stand as an obstacle for the airline to
  plan marketing campaigns and advertise their
  products.
• Tickets are often sold indirectly, airlines are
  cut off from the customer data that stays in the
  hands of these middlemen due to GDS oligopoly and
  technological anxiety of distributors.
• CURRENT MARKETING STRATEGY OF AIR KBZ
• Air KBZ and MAI had signed codeshare partnership
  and appointed a young celebrity pop-star as a
  brand ambassador since 2021.
• Air KBZ uses integrated marketing communication
  (IMC) approaches via various channels such as
  magazine, FM radios, and social media platforms
  namely Facebook, Twitter, Instagram and LinkedIn.
• Air KBZ maintained its famous customer services.
  It also has no record of aviation accidents
  compared to other competitors.
• A mobile apps was created for both App store and
  Google play and it is a nice way to engage with
  both existing and potential customers. Online the
  launched of the company for ticketing services
  are made available with the use of VISA, Master,
  JCB, Union Pay, MPU mobile payments options.
• Product life cycle (PCL) of Air KBZ is considered
  as growing stage as it has extended its
  destinations, fleet size and employees within the
  last ten years.
• Word of mouth customer experience Air KBZ is
  famous for superior in-flight services right
  time departure and arrival as compared to other
  competitors and it has special promotional
  campaigns and offers for its customers.
  Source (Air KBZ, 2021)

8
Company Background of Air KBZ

• Air KBZ also known as Air Kanbawza is a domestic
  airline, a privately-owned company of Myanmar and
  established in June 2010. Domestic flight service
  has launched since April 2011.
• Currently Air KBZ has 15 destinations of domestic
  routes with total fleet size of 10 (ATR72- 600)
  aircrafts where over 100 employees are involved
  in the day to day operational activities.
• Air KBZ aims to have more than 20 destinations in
  near future to various commercial centers of
  Myanmar (Air KBZ, 2021).
• Although the company does not officially disclose
  its revenue, business experts estimated that the
  annual revenue of Air KBZ may be around 7
  Million (RocketReach, 2022).
• COMPETITORS
• There are 5 other airlines operating in the
  domestic market in Myanmar including one
  State-owned Enterprise named Myanmar National
  Airline. Among domestic competitors, Air KBZ has
  formed a codeshare partnership and Customer
  Loyalty Program with Myanmar Airway International
  (MAI) (Yangon Aerodrome, 2022)

9
VISION STATEMENT To become the most renown
commercial airline in Myanmar. MISSION
STATEMENT To cater to the demands of the industry
by providing excellent customer service through
safety comfort, hospitality and enriching
employees. SERVICE PHILOSOPHY IN AIR KBZ AIR KBZ
intends to interact actively with its customers
to create a superior value of service. Therefore,
it focuses on both employees and customers by
establishing a service-profit chain culture,
which aims to Enhance internal service
quality Produce greater service value Ensure
customer loyalty Create a healthy environment for
growth Source (Air KBZ, 2021).
10
customer retention

• Customer retention is the ability of a brand to
  keep the customer to be subscribed or come back
  for repeated purchase of a product or service
  over a period of time, without switching to
  competitors (smith, 2022).
• Importance of customer retention
• Acquiring a new client is five to twenty-five
  times higher costing than retaining a repeated
  customer (gallo, 2014).
• Research also pointed out that the chances of
  successful sales rate to a repeated customer will
  be 60 to 70 whereas that of a new customer will
  be only 5 to 20 (Patel, 2022).
• It is also important to note that if a company
  increase its customer retention rate by 5 there
  will be the increased profitability from 25 to
  95 (Patel, 2022).
• customer retention strategies used by air KBZ
• Sky smile program was launched since 2021 in
  collaboration with codeshare partner, MAI (air
  KBZ, 2021). The program is mainly based on the
  number of miles travelled (points) with the
  following validity period
• Membership tier points 2 years based on an
  accumulated basis
• Award mileage 2 years but on a rolling basis,
  based on actual accruals/redemptions
• Membership tier 3 categories based on mileage
  (jade-0 to 5K ruby- 5K to 10K and diamond- over
  10K)
• Customers can earn miles, redeem miles and buy
  miles as per terms and conditions.
• Partner privilege offers to shop with 35 business
  partners with up to 40 discount offer
• (1.) 17 FB outlets (2.) 10 life style and
  shopping facilities (3.) 1 airport lounge service
  (4.) 3 health and wellness facilities (5.) 4
  hotels

11
Factors that determine price of airfares

• Airlines try to maximize profit
• Airline carriers are aware that it is inefficient
  for an aircraft to take off almost empty and it
  can also be said that it is inefficient for all
  the seats in an aircraft to be fully occupied at
  low cost per seat, airline revenue managers have
  devised a balancing act between finding the
  highest price and filling as many seats as
  possible. To reach this balance airlines must
  first understand their customers. Carriers track
  traveler purchasing behavior, for instance, there
  are leisure travelers and there are business
  travelers, the leisure travelers are sensitive to
  prices and therefore plan their trips in advance
  like a few months before departure, they occupy
  the most seats in an aircraft, while business
  travelers need more flexibility and usually book
  a few days before departure. With all of these in
  mind, Airlines sell cheaper tickets to leisure
  travelers and earlier. This helps them to fill
  more seats. This is why airfare remain about the
  same for months before departure then, it starts
  growing in multiple distinct steps . These steps
  are caused by advance purchase discount
  requirements. If a traveler fails to purchase
  tickets at least two week before departure, the
  minimum fare will get considerably higher.
• REACTING TO DEMAND
• If there are about 50 seats on an aircraft, even
  though these seats belong to the same class and
  airline doesnt want to sell all of them at the
  lowest fare nor at the highest cost. Carriers
  divide all fifty seats into multiple fare groups
  or buckets. For instance, there will be only 5
  seats at the lowest fare with minimum services
  and smallest bag allowances, once the 5 seats are
  sold out, the fare bucket is closed. You can no
  longer purchase a seat at that bargain basement
  price but forty five seats with more services
  and bag allowances are still available at higher
  cost in other buckets. They start filling up and
  then gradually close.
• Advance purchase discounts and fare bucket motion
  are the two main drivers that complement each
  other and cause most of the price changes at
  airlines because demand dictates pricing.

12

• FACTORS THAT DETERMINE PRICE OF AIRFARES CONTD
• EXTERNAL CONDITIONS
• The fares within buckets can also change due to
  external conditions.
• For instance, if the cost of fuel increases, it
  may cause the entire base fare to rise as well.
• b. Seasonal Trends
• Airlines also consider seasonal trends like if
  there are more people who fly for summer vacation
  to some destinations eg. Super bowl or a rock
  music festival, it will trigger airline revenue
  managers to manually increase fares as higher
  demand is anticipated for these dates.
• c. New flight entry
• Finally, if some low cost airline or
  competitors opens a new flight, the competing
  flight will get cheaper, even at traditional
  airlines. This is how dynamic pricing at airlines
  works today.
• It also has a video done by (altexsoft, 2019).
  Dynamic pricing in airline industry why flight
  fares constantly change.
• " href"https//www.youtube.com/watch?vjxKg65AimS
  It75s" class"replaced-iframe"

13
Strategic benefits of brand loyalty

• Improved customer retention and referrals
• Loyalty programs reward repeat customers with
  exclusive offers and personalized treatment, such
  as coupons and birthday gift cards, which drive
  customer retention. Loyal customers often tell
  their friends and family about the program's
  special offers, which brings in new referrals.
• More customer data
• Once a customer joins a loyalty program,
  marketing teams can track their preferences,
  buying habits and interests. In fact, most
  Americans are willing to trade personal
  information for loyalty program perks, according
  to Forrester research. Organizations can use this
  data to personalize outreach and customize
  monthly offers to different customer personas.
• Use the customer's voice
• Rather than develop many new marketing campaigns,
  marketers can rely on their rewards program
  members to drive more business. Organizations can
  ask customers to review the company or program on
  third-party sites. Successful loyalty programs
  often delight customers so much that they feel
  compelled to share their experiences on social
  media, which can bring in new business and
  loyalty members.
• Cost savings
• Although companies must spend money on the
  loyalty program benefits, management and
  marketing, it costs less than acquiring new
  customers to replace those who went to a
  competitor.

14
Key factors that influence customer loyalty after
initial flying experience.

• Service
• From the moment a traveler purchases a ticket,
  the airline begins rendering its service to the
  customer.
• Activities like
• Change of travel date to cancellation of flight
  or refund of money paid for airfare and how soon
  money was refunded
• Ticket attendants at the airport Where customers
  pick up their boarding pass how quick they were
  in issuing it, how their luggage was handled.
• The waiting area (lounge) Customers take note
  of how clean the place is they also notice how
  new or broken the furniture is.
• Punctuality Customers notice how punctual the
  time of departure is, if the flight took of at
  the exact time or not.
• The moment they board the flight, is the plane an
  old aircraft or is it a new one? what kind of
  aircraft? Is it an Airbus or a Boeing?
• Customers also consider if the service that was
  rendered by the host/ hostess on board (as it
  friendly or cold?).
• When the flight arrives its destination Some
  passengers are good at checking flight time on
  arrival to their destination How good was the
  pilot in landing the plane and announcing weather
  and flight altitude.
• Luggage Pick up Did they pack their luggage in
  the same aircraft as the one that they travelled
  in? Is their luggage missing? Is the airline
  going to pay for a lost luggage? Etc.
• All of these activities that took place the whole
  time makes up a customer experience with flying
  the carrier and if it was satisfactory to the
  customer, there will be a repeat purchase of
  airfare and if at any point in the whole of these
  process, customer encountered a set back they
  will be reluctant to make another purchase the
  next time they consider travelling and purchasing
  an air fare.
• TRUST Many travelers also look at air safety
  when making a decision, if the flight has a low
  to no record of accidents, customers stick with
  that Airline.

15
Recommendation for customer loyalty implementation

• Put a free travel option in the current customer
  loyalty program because people consider free
  travel as a real reward and it is a highly
  aspirational award for customers (Boer, 2018).
• Expand partnership with diverse business partners
  across commercial centers in the form of
  cross-promotion marketing so that customers can
  earn points while spending for shopping,
  restaurant dining, taxi rides, health facilities,
  and daily purchases such as fuels and foods
  (principles of marketing, 2015).
• Develop a partnership with financial or
  card-issuing organization as a form of
  co-branding debit or credit cards (altexsoft,
  2022).
• Include access to first tract service for loyal
  customers to meet their expectations (altexsoft,
  2022).
• Add priority boarding service to the current
  program so that high value customer will love the
  privilege of the program (saxon spickenreuther,
  2018).
• The company should reconsider current mileage
  policy based on numbers of flying miles and
  provide bonus miles with targeted threshold
  limits so that it can attract more to loyal
  customers to fly more.
• Consider a special price offering for members of
  loyalty program during the time of economic
  hardship.
• Promote selling miles to customers so that it
  will not only make passengers more loyal but also
  generate higher income stream for the airline
  (saxon spickenreuther, 2018).
• Add extra bonus program for high frequency
  travelers to appeal higher use of air travel for
  loyal customers.
• Consider the extension of expiry miles for loyal
  customers as a better breakage management.
  Currently the program set a validity of 2 years
  and it should be extended more than 2 years so
  that customers can redeem the miles without
  breakage (altexsoft, 2022) (saxon
  spickenreuther, 2018).

16
conclusion

• The Airline business is complicated but being
  able to understanding the marketing strategy and
  how to satisfy the expectations of the two
  segments of travelers (customer) identified is
  what keeps the Airline in Business.
• Airline products such as air tickets are sold to
  customers in consideration with studying their
  purchase behavior, if it doesnt put both segment
  of travelers into consideration, it loses out on
  successful business transaction knowing fully
  well that the leisure travelers are those who
  fill up the most seats.
• The satisfaction that customers get from the
  consideration in making the flight fares fit
  every member of the society using pricing and
  making service available to every segment of
  customers is a strategy for retention and this
  results in customer Loyalty.
• Customers who are satisfied with a An Airlines
  service will return to make another trip and
  continuous transaction results to customer
  loyalty and retention.
• Many airlines now use miles to calculate the
  level of loyalty plan each customer enjoys and
  some even go as far as giving out gift cards that
  can be used to make purchases like buy coffee at
  a café for shopping to buy clothing items or
  groceries.
• Loyalty helps an organization save cost of
  getting new customers because retaining the old
  ones gives a company more sales and through
  referrals from existing customer, new customers
  patronize the business.

17
references

• Air KBZ. (2021). About Us. Airkbz.com
• https//www.Airkbz.com.Mm/Air-kbz-
  experience/About-air-kbz/About-us
• Altexsoft. (2019, August 27) Dynamic pricing in
  airline industry why flight fares constantly
  change. Altesoft.com
• https//www.youtube.com/watch?vj
  xKg65AimSIt75s
• Altexsoft. (2022, January 28). Airline Marketing
  and Advertising Use Cases from American Airlines,
  Ryanair, Air France, and Others. Altesoft.com
  https//www.altexsoft.com/blog/airline-marketing-a
  dvertising/
• Altexsoft. (2022, May 20). Airline Loyalty
  Programs Main Aspects, Types, And A
  Technological Perspective. Altexsoft.com
• https//www.Altexsoft.Com/Blog/Ai
  rline-loyalty-program/
• Bernazzani, S. (2021, January 12). Customer
  Loyalty. Hubspot blog
• https//blog.hubspot.com/service/
  customer-loyalty
• Boer, E. R. (2018). Strategies In Airline
  Loyalty Frequent Flyer Programs. Singapore FFP
  Investment Advisory Pte. Ltd.
• Chun, S. Y., Boer, E. D. (2021, April 02). How
  Loyalty Programs Are Saving Airlines. (H. B.
  Review, Producer) Hrb.org
• https//Hbr.org/2021/04/How-loyal
  ty-programs-are-saving-airlines
• Gallo, A. (2014, October 29). The Value Of
  Keeping The Right Customers. Hbr.org
• https//Hbr.Org/2014/10/The-value
  -of-keeping-the-right-customers

18

• Miller, G. (2021). Importance of Airline Loyalty
  Programs In a Post-covid World. (Annex Cloud)
  Annexcloud.com
• https//www.Annexcloud.com/Blog/A
  irline-loyalty-programs/
• Patel, S. (2022, March 16). 15 Effective Customer
  Retention Strategies From Top Brands.
  Revechat.com
• https//www.Revechat.com/Blog/Cust
  omer-retention-strategies
• Peek, S. (2022, August 3). Build customer
  loyalty. Business News Daily.com
• https//www.businessnewsdaily.com/
  16017-build-customer-loyalty.html
• Principles of Marketing. (2015). University of
  Minnesota Libraries Publishing.
• https//doi.org/10.24926/8668.1901
  (Original work published 2010)
• RocketReach. (2022). Air KBZ Ltd. Information.
  rocketreach.co
• https//rocketreach.co/air-kbz-ltd-
  profile_b445e474fa475fa8
• Saxon, S., Spickenreuther, T. (2018, October
  10). Miles ahead How to improve airline
  customer-loyalty programs. mckinsey.com
  
• https//www.mckinsey.com/industries
  /travel-logistics-and-infrastructure/our-insights/
  miles-ahead-how-to-improve-airline-customer-loyalt
  y-programs
• Smith, L. (2022, June 03). 13 Customer Retention
  Strategies to Earn Loyalty. wordstream.com
• https//www.wordstream.com/blog/ws/
  2022/03/09/customer-retention-strategies
• Yangon Aerodrome. (2022). Airline Directory.
  Yangon International Airport
• https//yangonairport.aero/index.ph
  p/en/flight-information/airline-directory