As per the International Air Transport Association, Airlines worldwide, in 2009, which witnessed the worst demand-decline in the airline history, are estimated to have lost USD 9.4 billion. For the same year, Emirates will announce even more profits, including another record for passenger traffic, perhaps above the 23 million mark! How?
Between April 2009 and December 2009, when all other Airlines were getting into a price war to lock-in passengers, in order to fend off the global recession, Emirates increased its fares by 35 percent across its network. The surprising, but strategically-planned outcome of doing so was that the demand for Emirates grew up! Seat factors went up, so did the loads!
The decision for hiking the fares did require a little retrospect for Emirates. It was quite tempting for Emirates to get into the global price-war, but, then, it realized that having spent millions of dollars in building a premium brand, getting into the price war wouldn’t make sense at all.
For example, Emirates had put first-class showers on its A380 super-jumbos; had sponsored horse racing, yachting and football events across the world. All these strategic, brand-building investments would be in a stark-contrast to its decision for getting involved in the global price-war! Thus, to show the world what it was, and, perhaps, what it is, it hiked its fares across the board. Moreover, it also identified a much-untapped goldmine in first-class and in business-class passengers coming out of Europe, Asia, and South America. Awesome! Isn’t it?
But, its competitors are crying foul, as they claim that Emirates has an undue advantage over its competitors, as it has full support of the airport and civil aviation authorities, especially of those of Dubai. But, then, that is Emirates’ strategic, niche business-model for cutting travel-time short for its passengers by creating new “city-pairs” via a single stop at Dubai, and also for realizing Dubai International Airport’s strategic growth-model that seeks to be the world’s busiest aviation hub. Now, this is called aligning your growth strategies with those of your business-partners – a strategy for devising a win-win solution for all the parties involved, even for your customers as you shorten their travel-time while still putting them on a luxurious flight!
Emirates is chalking out a big-potential-for-growth strategy by linking 500 profitable destinations worldwide under its “city-pair” business-model, up from its current network of 101 cities. It says, “It’s just the tip of the iceberg!”
The only constraints that it may face will be the physical constraints of Dubai International Airport, in terms of airspace, runways, and other physical infrastructure that might limit the use of its “city-pairs” concept. Emirates, off course? Of course, not!
Showing posts with label Marketing. Show all posts
Showing posts with label Marketing. Show all posts
Friday, April 2, 2010
Saturday, February 27, 2010
What Comes First: Price or Costs?
For marketing, in general, letting the price, and/or the profit margin, determine the costs of the product, rather than letting the costs of the product determine the price, and/or the profit margin, is the most prudent way to go forward.
First, decide the price of your product, and the subsequent profit margin, that you must make to satiate, or justify, your investments. Doing so gives you a costs window that you may put at stake in producing the product. Thus, the price – and/or the profit margin – of the product drives its viable costs structure. In the worst case, you might not be able to produce the product within the estimated costs. But, your money remains intact, and you can still use it for something better.
If you do the other way round, that is, if you first produce the product, and then aggregate the costs incurred in producing it, in that case, the total costs drive the price of the product, and subsequently drive the profit margin, which may or may not justify the investments made, keeping in mind that there is a certain maximum price the consumer is ready to pay for the product. This second method is prone to the risks of making the entire investments sour! The worst situation has the potential to wreck havoc -- that is that you might lose all your investments!
It is certainly not that the first method always is the best way of deciding on the price, and thus the justified costs, of a product. But, it certainly is the more logical way of going forward.
However, in some situations, the second method is the only possible way of zeroing in on the costs, and subsequently the price of a product, especially when both the producer and the potential consumers are completely new to the concept of the product that is going to be produced.
The call is yours, so take the shot! And, don't forget that you will be held accountable for it too, because if you miss it, the investors will not let you off the hook! You can run; you can hide, but you can't skip, my "love." :-)
First, decide the price of your product, and the subsequent profit margin, that you must make to satiate, or justify, your investments. Doing so gives you a costs window that you may put at stake in producing the product. Thus, the price – and/or the profit margin – of the product drives its viable costs structure. In the worst case, you might not be able to produce the product within the estimated costs. But, your money remains intact, and you can still use it for something better.
If you do the other way round, that is, if you first produce the product, and then aggregate the costs incurred in producing it, in that case, the total costs drive the price of the product, and subsequently drive the profit margin, which may or may not justify the investments made, keeping in mind that there is a certain maximum price the consumer is ready to pay for the product. This second method is prone to the risks of making the entire investments sour! The worst situation has the potential to wreck havoc -- that is that you might lose all your investments!
It is certainly not that the first method always is the best way of deciding on the price, and thus the justified costs, of a product. But, it certainly is the more logical way of going forward.
However, in some situations, the second method is the only possible way of zeroing in on the costs, and subsequently the price of a product, especially when both the producer and the potential consumers are completely new to the concept of the product that is going to be produced.
The call is yours, so take the shot! And, don't forget that you will be held accountable for it too, because if you miss it, the investors will not let you off the hook! You can run; you can hide, but you can't skip, my "love." :-)
Saturday, February 20, 2010
Innovative Financing: Changing the Relationship Between the Rich and the Poor
Very soon, people who fly will have a chance to help the world's some of the most unfortunate inhabitants. Flyers, when purchasing airline tickets either on the websites of airlines or through travel agents, will be asked to make a direct contribution to the fight against the world's three deadliest epidemics: HIV/AIDS, malaria, and tuberculosis. This is part of a movement called innovative financing, which is a new kind of aid-tool that could fundamentally change the relationship between the rich and the poor throughout the world, a few dollars at a time.
Each of these diseases – HIV/AIDS, malaria, and tuberculosis – still causes more deaths in developing countries than any other single disease, according to the World Health Organization. In 2004, the last year for which statistics were available, together these three diseases caused one in eight deaths in low-income countries.
So, the whole point is to help such poor people the next time you fly. Trust me; changing the so-called “third world” in this way is cheaper than changing such world by bombing them! The logic is very simple: when people have lots to lose, they think multiple times before losing such things. Let’s help people in getting a real life, and they will think hundreds of times before even planning to give it up! Please raise the costs of “switching” – in a business jargon, for people who understand only business!
Each of these diseases – HIV/AIDS, malaria, and tuberculosis – still causes more deaths in developing countries than any other single disease, according to the World Health Organization. In 2004, the last year for which statistics were available, together these three diseases caused one in eight deaths in low-income countries.
So, the whole point is to help such poor people the next time you fly. Trust me; changing the so-called “third world” in this way is cheaper than changing such world by bombing them! The logic is very simple: when people have lots to lose, they think multiple times before losing such things. Let’s help people in getting a real life, and they will think hundreds of times before even planning to give it up! Please raise the costs of “switching” – in a business jargon, for people who understand only business!
Thursday, February 18, 2010
Telcos Preparing for the Next Low-cost, Low-end Telecoms War
Vodafone has introduced the `cheapest’ mobile phone ever at the Mobile World Congress (MWC) being held in Barcelona. The handset, aimed for the developing countries, will be initially launched in India, Turkey, and eight African countries including Lesotho, Kenya, and Ghana. The phone is available for less than USD 15 and allows voice calls, SMS as well as mobile payment services. An expensive version of the phone has a color screen and FM radio and is priced at USD 20.
Reliance Communications (RCOM), India’s second biggest mobile communications company, has signed a deal with Huawei to purchase two million CDMA handsets worth INR 3.4 billion (USD 73.27 million). The handsets are priced in a range of INR 1700 (USD 36.63) to INR 1950 (USD 42.02) each unit and are equipped with camera and FM radio. RCOM plans to launch these handsets in Tier-II and Tier-III cities in India. (1 USD = 46.40 INR).
Now, as mobile call-rates in India are already close to free, a new wave of low-cost, low-end war is apparently emerging on the horizon to capture even the remotest of countrymen and countrywomen. Once the telcos are satiated that not even a single Indian is left without having a mobile phone in hand, a new wave of unimaginably massive, extremely painful telecoms market-consolidation will happen. There will then be only two options: buy or get sold! And, such buying and selling will happen based on the market segments the telcos would like to play in and play with. Telcos valuations will be computed almost linearly: X number of customers times $Y per customer – and this will be based on customer segmentation -- plus, the net assets, if any. That’s it. Only the best and biggest will survive the onslaught "massacre." Thus, the survivors will live happily ever after, until the next disruptive technologies emerge on the markets. The end of the saga!
Wednesday, February 17, 2010
Is Buzz Buzzing?
Buzz has started off with a negative buzz! For end-users, the biggest “buzz” is a concern for privacy.
By default, based on your contacts list, it connects you to people! When you add others to your Buzz – that is, when you start following, or when you start getting followed – you can see who all your “Buzz-mates” are connected to! Now, this is a serious concern for people who experimented with – or better, say, who got victimized of – Buzz!
Well, Google has promised to fix this bug immediately. The “patches” are on their way, in phases, of course. But, I think its strategy has already paid off in getting million of customers on Day 1 of the Buzz release. I call this business strategy “leveraging” and “monetizing” the power of the brand, the faith people have in the brand, and the fickleness of, and the lack of comprehensiveness in, the rules and regulations that govern the industry in which the brand operates. It’s about weighing the costs and the associated benefits. It’s all business! And, businesses do capitalize on loopholes in law. Companies will keep on exploiting such loopholes in order to gain customers and improve their bottom-line.
Wasn’t the privacy issue involved obvious to Google? The answer is as obvious as the question itself! It’s called go-to-market strategy – it is about how to acquire customers in a crowded market. Thus, Buzz was released with a buzz! And, it successfully created the necessary buzz for getting all our attention, especially when we are busy on Facebook, Twitter, MySpace, Orkut, and others. Mission accomplished! :-)
By default, based on your contacts list, it connects you to people! When you add others to your Buzz – that is, when you start following, or when you start getting followed – you can see who all your “Buzz-mates” are connected to! Now, this is a serious concern for people who experimented with – or better, say, who got victimized of – Buzz!
Well, Google has promised to fix this bug immediately. The “patches” are on their way, in phases, of course. But, I think its strategy has already paid off in getting million of customers on Day 1 of the Buzz release. I call this business strategy “leveraging” and “monetizing” the power of the brand, the faith people have in the brand, and the fickleness of, and the lack of comprehensiveness in, the rules and regulations that govern the industry in which the brand operates. It’s about weighing the costs and the associated benefits. It’s all business! And, businesses do capitalize on loopholes in law. Companies will keep on exploiting such loopholes in order to gain customers and improve their bottom-line.
Wasn’t the privacy issue involved obvious to Google? The answer is as obvious as the question itself! It’s called go-to-market strategy – it is about how to acquire customers in a crowded market. Thus, Buzz was released with a buzz! And, it successfully created the necessary buzz for getting all our attention, especially when we are busy on Facebook, Twitter, MySpace, Orkut, and others. Mission accomplished! :-)
Saturday, May 24, 2008
The Common Sense of Marketing
I was reading through the blogs of Seth Godin, and there I encountered some Marketing tips, which he asks to proliferate. I have edited, removed, and added to his list. You can feel free to adapt the list, provided you give courtesy to him.
The Common Sense of Marketing:
1) Anticipated, personal and relevant advertising always does better than unsolicited junk.
2) Making promises and keeping them is a great way to build a brand.
3) Your best customers are worth far more than your average customers.
4) Share of wallet is easier, more profitable and ultimately more effective a measure than share of market. But, share of market should not be overlooked at any cost.
5) Marketing begins even before the product is created.
6) Advertising is just a symptom, a tactic. Marketing is about far more than that.
7) Low price is a great way to sell a commodity. That’s not marketing, though, that’s efficiency.
8) Products that are remarkable get talked about.
9) Marketing is the way your people answer the phone, the typesetting on your bills, and your returns policy.
10) You can’t fool all the people, not even most of the time. And people, who are not fooled, talk about the experience.
11) If you are marketing from a fairly static annual budget, you’re viewing marketing as an expense. Good marketers realize that it is an investment.
12) People don’t buy what they need. They buy what they want.
13) What people want is the extra, the emotional bonus they get when they buy something they love.
14) Business to business marketing is just marketing to consumers who happen to have a corporation to pay for what they buy.
15) Traditional ways of interrupting consumers (TV ads, trade-show booths, junk mails) are losing their cost-effectiveness. At the same time, new ways of spreading ideas (blogs, permission-based RSS information, and consumer fan clubs) are quickly proving how well they work.
16) People all over the world and of every income level, respond to marketing that promises and delivers basic human wants.
17) Good marketers tell a story.
18) People are selfish, lazy, uninformed and impatient. Start with that and you’ll be pleasantly surprised by what you find.
19) Marketing that works is marketing that people choose to notice.
20) Effective stories match the world’s view of the people you are telling the story to.
21) Choose your customers.
22) A product for everyone rarely reaches much of anyone.
23) Living and breathing an authentic story is the best way to survive in a conversation-rich world.
24) Marketers are responsible for the side-effects their products cause.
25) Reminding the consumer of a story they know of and trust in is a powerful shortcut.
26) Good marketing guys measure.
27) Marketing is not an emergency. It’s a planned, thoughtful exercise that started a long time ago and doesn’t end until you’re done.
28) One disappointed customer is worth ten delighted ones.
29) In the Google world, the best in the world wins more often, and wins more.
30) There are more rich people than ever before, and they demand to be treated differently.
31) Organizations that manage to deal directly with their end-users have an asset for the future.
32) You market when you hire and when you fire. You market when you call a Tech Support and you market every time you send a memo.
33) Blogging makes you a better marketer because it teaches you humility in your writing.
34) Obviously, knowing what to do is very, very different from actually doing it.
35) You should be marketing even after selling.
The Common Sense of Marketing:
1) Anticipated, personal and relevant advertising always does better than unsolicited junk.
2) Making promises and keeping them is a great way to build a brand.
3) Your best customers are worth far more than your average customers.
4) Share of wallet is easier, more profitable and ultimately more effective a measure than share of market. But, share of market should not be overlooked at any cost.
5) Marketing begins even before the product is created.
6) Advertising is just a symptom, a tactic. Marketing is about far more than that.
7) Low price is a great way to sell a commodity. That’s not marketing, though, that’s efficiency.
8) Products that are remarkable get talked about.
9) Marketing is the way your people answer the phone, the typesetting on your bills, and your returns policy.
10) You can’t fool all the people, not even most of the time. And people, who are not fooled, talk about the experience.
11) If you are marketing from a fairly static annual budget, you’re viewing marketing as an expense. Good marketers realize that it is an investment.
12) People don’t buy what they need. They buy what they want.
13) What people want is the extra, the emotional bonus they get when they buy something they love.
14) Business to business marketing is just marketing to consumers who happen to have a corporation to pay for what they buy.
15) Traditional ways of interrupting consumers (TV ads, trade-show booths, junk mails) are losing their cost-effectiveness. At the same time, new ways of spreading ideas (blogs, permission-based RSS information, and consumer fan clubs) are quickly proving how well they work.
16) People all over the world and of every income level, respond to marketing that promises and delivers basic human wants.
17) Good marketers tell a story.
18) People are selfish, lazy, uninformed and impatient. Start with that and you’ll be pleasantly surprised by what you find.
19) Marketing that works is marketing that people choose to notice.
20) Effective stories match the world’s view of the people you are telling the story to.
21) Choose your customers.
22) A product for everyone rarely reaches much of anyone.
23) Living and breathing an authentic story is the best way to survive in a conversation-rich world.
24) Marketers are responsible for the side-effects their products cause.
25) Reminding the consumer of a story they know of and trust in is a powerful shortcut.
26) Good marketing guys measure.
27) Marketing is not an emergency. It’s a planned, thoughtful exercise that started a long time ago and doesn’t end until you’re done.
28) One disappointed customer is worth ten delighted ones.
29) In the Google world, the best in the world wins more often, and wins more.
30) There are more rich people than ever before, and they demand to be treated differently.
31) Organizations that manage to deal directly with their end-users have an asset for the future.
32) You market when you hire and when you fire. You market when you call a Tech Support and you market every time you send a memo.
33) Blogging makes you a better marketer because it teaches you humility in your writing.
34) Obviously, knowing what to do is very, very different from actually doing it.
35) You should be marketing even after selling.
Subscribe to:
Posts (Atom)