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
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.
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
Capacity up 16-18%
11st largest US domestic, 7th largest US international, and expansion is in Spirit’s future
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
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
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