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Marketing Plan

Situation Analysis

Agenda

Macro-situation: Economics

Technology

Sensitivity to Economic Activity

Energy Prices

Severity and duration of downturn in US and global economy

Unemployment level and disposable income

Changes in consumer preferences and perceptions

  • Situation Analysis
  • Porter Analysis
  • SWOT Analysis
  • Marketing Strategy
  • Target Market Definition
  • Action Programs

  • No major changes in airplane technology
  • Mostly improvements in aerodynamics and engine efficiency
  • Airbus A320 currently has the best safety record of the top 5 airplanes currently in production
  • More efficient Airbus A321 engine to be released in 2015

Aircraft fuel= 41.9% of operating

expenses in 2011

Difficult to control and predict

Availability?

Price volatility

Heavily reliant on fuel refined in

Gulf Coast region

Impacted by hurricanes, oil spills, and

political events throughout the world

Globalization

Reduced need for in-person communication

Ease of videoconferencing and Skype

Labor Strike of 2010

Political/Legal

  • TSA, DOT, and law enforcement agency compliance
  • Onboard sky marshals
  • Security education for personnel
  • Heightened airline security post 9/11
  • Instability of airline industry per recent history of terrorism
  • Railway Labor Act
  • Unions for pilots, flight attendants, dispatchers
  • Foreign wars and other threats to global oil security can cause fluctuating fuel costs

  • Federal Aviation Administration (FAA) mandated and approved maintenance program with Spirit’s technical services department
  • All pilots must have proper licensing and medical certifications
  • FAA approval for flight attending training
  • All employees are subject to pre-employment, random, and post-accident drug testing

  • Compliance
  • Federal and state environmental laws regarding emissions, noise and disposal of materials.
  • Environmental Protection Agency emissions standards
  • Federal Communications Commission requirements and radio licensing

  • DOT required insurance policies for public and passenger injury, property damage, cyber risk, media liability, fire coverage, and workers compensation
  • Must comply with customs and foreign governments for international flights in the Caribbean and South America
  • Some politicians are calling for additional corporate taxes as well as environmental taxes.

Environmental Factors

Demographic Shifts

Social/Culture

  • 49% of customers between ages 18-44
  • 82% of customers are homeowners
  • 53% of customer have upper middle class income range
  • Mainly leisure and business travelers
  • Short stays, quick business trips
  • Stay in hotels, villa, vacation spots
  • Demographics remaining constant despite social conditions

  • Airports 49
  • Countries 28
  • Continents 2
  • Main Airport: Fort Lauderdale International
  • The modern fee culture, sustainability movement, and efficiency culture has been affecting the company
  • They have embraced the culture and have ran their business model using low fares and high fees
  • Customers receptive to fees, lighter airplane weight reduces fuel consumption, minimal headquarters operations
  • Spirit Airlines is a beneficiary of these cultures.
  • Hurricanes

  • Natural disasters

  • New Airbus A321 engine

“greener engine”

Porter Analysis

The Competitors

Barriers to Entry

Strength of Competitors

  • High cost of equipment
  • Heavy oversight and regulation
  • Contracts and agreements with airports
  • Extensive labor force necessary
  • Pilots
  • Flight Attendants
  • Ground Crew

Spirit has…

Lowest capital

Lowest market share

Highest profit margin

Marketing

Duplicability

Sustainable Advantages

Ultra Low-Cost Structure

Specific Target Market

Unbundled “air travel services”

Fort Lauderdale Airport

$9 Fare club

“Ultra Low-Cost” model

Southwest

RYANAIR

Charging for additional services…

Priority seating

Checked baggage

Food and amenities

Future of carry-on luggage?

SWOT Analysis

Target Market Definition

Demographics

Primary Market

Domestic US, Caribbean, Latin America

South Fla

$ > Time

Price-sensitive

Super-budgeted

Non-corporate travelers

Usage rate

Secondary Market

At least 1-2x a year

Students – more opportunities to fly (school breaks—SPRING, athletics, friends, relatives)  college cities

Benefits

Students (college/graduate)

Vacationers/ tourists

Honeymooners

Small business owners

Military

Prices that are as low as possible at expense of comfort

Personalization

Lifestyle = frugal traveler, AC gambler

Size and Growth

SWOT ANALYSIS

SWOT Analysis

SWOT ANALYSIS

Strengths

Capacity up 16-18%

11st largest US domestic, 7th largest US international, and expansion is in Spirit’s future

Weaknesses

Pricing Issues

Distribution Issues

W

S

W

S

Weaknesses

  • Bad press
  • Small fleet
  • Customer service
  • Employee morale
  • Worker negotiations
  • One of several low cost carriers

Strengths

  • Control over specific markets
  • Efficient low cost operations
  • Low fares, fee culture
  • Ancillary revenues
  • No debt
  • “A la Carte” Pricing

Low fares, fee culture

Control over specific markets

Ancillary revenues

Small Fleet

Bad Press

Employee Job Satisfaction

Three Main Distribution Channels:

www.spirit.com (primary distribution channel)

Outsourced call centers

Travel agents

“Unbundled services”

Cost of jet fuel

Availability

Price volatility

New airplanes

Can we price too low?

T

O

No debt

Threats

  • JetBlue (Similar)
  • American airlines (Major)
  • Rising fuel costs
  • Recession
  • Terrorism and war
  • FAA regulations & maintenance

“A la Carte” Pricing

Efficient low cost operations

Opportunities

  • Airplane/engine technology design
  • Recovery of US Economies
  • Discount vacation package offerings
  • Flight path technology
  • Going green efforts

Customer Service

Workforce Negotiations

Spirit is just one of several low fare airlines

Marketing Strategy

  • Use both Push and Pull Advertising to expand our target market
  • While also maintaining our low-price structure and offering new incentives to college students
  • Continue utilizing email distribution list
  • Expand social media marketing
  • Television advertising
  • “Go To College” Campaign

SWOT ANALYSIS

SWOT Analysis

Opportunities

SWOT ANALYSIS

Threats

O

T

Fuel Costs

Flight path technology

Recovery of US Economies

Airplane/Engine Technology Design

Low Fair Competitors (JetBlue)

US and World Economies/ Recession

Issue Analysis

  • How do we attract and retain customers?
  • Is an increase in promotion needed to fend off competition?
  • Should we review our price strategy?
  • Are we expecting any major competitive attacks of our current markets?
  • Do we need new advertising?
  • How do we keep customers from defecting?

Terrorism & Wars

FAA Regulations

Major Airline Competitors (American Airlines)

Discount vacation package offerings

Going green Initiatives

Action Program

“Home from College” Campaign

Short-Term Goals: Begin October 2012

A “Two Phase” Approach….

It all starts with social media….

Who are we targeting?

  • College and graduate students

Why?

  • Price sensitive customers
  • Many opportunities to fly
  • Fall/Winter/Spring/Summer Breaks
  • Sporting events year round
  • Visiting friends on different campuses
  • Traveling home to visit family
  • Already have a market in most of these cities

Student version of the “$9 Fare Club”

Beginning Fall 2012/ reassess annually

4 year maximum

Receive all $9 Face Club Benefits at a discounted annual rate

$40/year vs. $60/year

Verify with a “.edu” email address

Budget

“Home from College” Campaign

Short-Term Goals: Begin October 2012

Long Term Goals: Begin January 2013

Email Distribution List

Send to existing customers with a “.edu” address

Topical and edgy advertising slogan

Possibly related to “college-style” movies

Animal House

Old School

Van Wilder

Television advertising campaign

Begin early in the year

Target Spring Breakers

Hire Tucker Max as a spokesperson

Short 30 sec ad encouraging

trips to Caribbean/Mexico

Air on Comedy Central, E!, ESPN, MTV

Long-Term Goals: Begin January 2013

Go “Back to College”

Hire sales staff to visit college

campuses in target cities

Atlanta

New York City

Chicago

Los Angeles

Why is this necessary?

Establish relationships with school

newspapers

Raise awareness before Spring Break/ March Madness

Conclusion

Works Cited

Questions?

“American Airlines Annual Report 2011” available on the Web 3 July 2012:

http://us1.iracorpfilings.com/sec/SEC_Listing.asp?yr=2012&cik=4515&s=K&b=

“Delta Airlines Annual Report 2011” available on the Web 3 July 2012:

http://www.delta.com/about_delta/investor_relations/annual_report_proxy_statement/

“JetBlue Airways Corp. 2011 Annual Report 2011” available on the Web 3 July 2012:

<http://investing.businessweek.com/research/stocks/financials/secfilings.asp?ticker

=JBLU:US>

“Spirit Airlines, Inc. Annual Report 2011” available on the Web 29 June 2012:

< http://ir.spirit.com/annuals.cfm>

Quantifying the Results

If the Action Plan is successful…

Continue with the Social Media websites

Extend the number of visits to college campuses

Consider attending sporting events?

Think about post-college life

Reassess the action plan in August 2013

Measure the increase in the number of “.edu” addresses

Increase in the amount of ticket and non-ticket revenue

Check status of Facebook, MySpace, and Twitter accounts

Quantify repeat customers with “.edu” email addresses

Chris DeClue, Tory Lee, Aakash Patel,

Adithya Mathews, Lilia Stefaniwsky

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