Marketing case study on Indigo Airlines

Marketing Case Study

1. Presented by
Neelutpal Saha (222012)
Shan Lal (222021)
Mrinmoy Sarkar (222011)
Pankaj Srivastava (222014)

2. •Aviation Industry
•About IndiGo Airlines
•PEST analysis
•Porter’s 5 forces analysis
•SWOT and TOWS analysis
•Competitive Strategy
•STP
•Product Mix
•Market Leader Strategy
•Branding and Promotional Strategy
•The road ahead
•Recommendations
AGENDA

3. Total domestic passengers carried by the scheduled domestic airlines between
January and May 2013 were 25.998 million, as against 25.808 million during the
corresponding period of previous year thereby registering a growth of 0.74 per
cent, revealed the statistics from Directorate General of Civil Aviation
No-frill carrier IndiGo lead in terms of market share with almost 30 per cent of
the pie, followed by Jet Airways-Jet Lite combine at 25.3 per cent, Air India
Domestic at 19.2 per cent, Spice Jet at 17.5 per cent, and Go Air at 8.3 per cent
for the month of July 2013.
The air transport (including air freight) in India has attracted foreign direct
investment (FDI) worth US$ 456.84 million from April 2000 to July 2013, as per
the data released by Department of Industrial Policy and Promotion
AVIATION INDUSTRY

4. Indigo is an Indian airline company headquartered at Gurgaon. It is a low cost
carrier and the largest airline in India with a market share of 30.3% as of September
2013. IndiGo is one of the fastest growing low cost carriers in the world. With its
fleet of 72 new Airbus A320 aircraft, the airline offers 447 daily flights connecting
to 35 destinations.
Indigo was set up in early 2006 by Rahul Bhatia of InterGlobe Enterprises and
Rakesh S Gangwal, a United States-based NRI. InterGlobe holds 51.12% stake in
IndiGo and 48% is held by Gangwal's Virginia based company Caelum Investments
On 17 August 2012, Indigo became the largest airline in India in terms of market
share (27%), In August 2013, the Centre for Asia Pacific Aviation ranked Indigo
amongst the 10 biggest low-cost carriers in the world.
ABOUT INDIGO

5. India’s largest airline by passengers carried, reported a more than sixfold increase
in profit to Rs. 787 crore for 2012-13—the low-fare airline’s fifth consecutive
profitable year. Revenue rose 65.4% to Rs.9,458 crore, according to data
submitted to the Directorate General of Civil Aviation
MARKET SHARE

6. Indigo's stuck to its low-cost,
single class model unlike rivals Jet Airways.
Selling and leasing back planes
helps its balance sheet
Quality and detail key to good service
It’s all about customer focus
Using technology smartly
WHY IS THE MARKET LEADER?
A d i t y a G h o s h , P r e s i d e n t
R a h u l B h a t i a , M D

7. This analysis is a framework or tool used by marketers to analyze and monitor
the macro environmental (external marketing environment) factors that have an
impact on an organization
PEST ANALYSIS•cu5t59yu8
Open Sky Policy/ Deregulation (+)
Low Entry Barriers (+)
FDI Limits (+)
49 % for airlines
100% for airports
Extensive airports development
planned
Political:
Open Sky Policy/ Deregulation (+)
Low Entry Barriers (+)
FDI Limits (+)
49 % for airlines
100% for airports
Extensive airports development
planned
Socio- Cultural:
Growing Middle Class (+)
Domestic Leisure Travel (+)
Foreign Tourist (+)
Status Symbol (+)
Security Issues & Terrorism (-)

8. CONTD
Economic:
Growing Middle Class Income (+)
Consistent GDP Growth (+)
Hike in average income (+)
Growth in Tourism (+)
Rising ATF Price (-)
Technological:
Modernized Airports (+)
Greenfield Airports (+)
Better handling of Aircrafts,
passengers and Cargo (+)
Video-conferencing/VoIP (-)

9. It is a simple framework for assessing and evaluating the competitive strength
and position of a business organization (in short the micro-environment)
PORTER’S 5 FORCES ANALYSIS OF
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Threat of New Entrants
Low Product differentiation in basic services
Low Switch cost for Customers but high for airlines
Open sky policy for foreign entrants
Very high set-up costs
Increasing fuel prices
Shortfall + High cost of skilled resources- Pilots

10. CONTD…BrAorataton’viuAnvLn3CkkdauAy
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Bargaining Power of Suppliers
Duopoly in Aircraft Market- Low bargaining power with airlines
Switch cost to other suppliers is high
Shortage of Commercial Pilots in India
Limited Suppliers of ATF in IndiasvlkuSaSaWunmaWrdA9
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Competitive Rivalry
Very little product differentiation in Services
Mature Industry- Only scope for growth by gaining other
people’s market share
High bargaining power of suppliers
No sense of brand royalty amongst customers and can easily
switch to other airlines

11. CONTDBrAorataton’viuAnvLnBC9uAy
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Bargaining Power of Buyers
High number of buyers fragmented- lowers their power
With high number of buyers, growth opportunities are also
high
Switch costs are minimal for buyerspWradrJadaS9nvLn3CJySaSCSuy
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Availability of Substitutes
Indirect Substitutes are railways- but not powerful as airlines,
score highly in travel time
Travel by air is a status symbol
However direct substitutes are other Low Cost Carriers –since
switch cost is low, threat of substitutes is high

12. A tool that identifies the strengths, weaknesses, opportunities and threats of an
organization. The method of SWOT analysis is to take the information from an
environmental analysis and separate it into internal (strengths and weaknesses)
and external issues (opportunities and threats).
S.W.O.T ANALYSISEMLs bMru
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Strength:
1.Low fares
2.High Service Quality
3.Operational Efficiency
4.Customer Service
5.Short haul flights
6.Fuel Efficient AircraftsksGB sppspu
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Weaknesses:
1.Less differentiation
2.Short lived innovations
3.Untapped domestic cargo
segment
4.No established alliances
5.Lack of product depth and
breadth

13. CONTD…AhhnLMR dMwu
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Opportunity:
1.Increasing middle class population
2.Increase in domestic tourism
3.Booming air cargo business
4.Chartered ServicesirLsGMpu
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Threats:
1.High ATF prices
2.Economic slowdown
3.Government policies
4.Technological advancement in
communication

14. TOWS analysis is a method of strategic analysis used to study the environment of
the organization and its interior
TOWS ANALYSIS3.q
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SO:
1.Increase domestic destinations
2.Upgrade to long haul aircrafts as
per demand
3.Offering affordable international
holiday packages to the middle
class travelers,.q
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WO:
1.Plan to go international
2.Expand to freight/cargo services
3.Diversify to Chartered flight
services
4.Loyalty, Rewards and other
Customer retention programs

15. CONTD•Av
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ST:
1.Effective incentive program to
prevent talent drain
2.Sign anti-poaching agreement
with competitors
3.Continue to successfully hedge
fuel prices by importinggAv
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WT:
1.Create a tie-up with other LCC
players like Air Asia for the Indian
customer base to provide last mile
connectivity
2.Offer business class seats,
continue innovation of value added
services while focusing on cost
optimization

16. SEGMENTATION, TARGET AND
POSITION
Segmentation, targeting, and positioning together comprise a three stage
process. We first (1) determine which kinds of customers exist, then (2) select
which ones we are best off trying to serve and, finally, (3) implement our
segmentation by optimizing our products/services for that segment and
communicating that we have made the choice to distinguish ourselves that
way.

17. A firm possesses a Sustainable Competitive Advantage (SCA) when it has value-
creating processes and positions that cannot be duplicated or imitated by other
firms that lead to the production of above normal rents
PORTER’S SCA MODEL
Cost Leadership and Competencies
•Avoiding in flight services
•No free meals
•Strategic use of disposable bags for quick cleaning of aircrafts before
landing
•Highest no. of seats
•Light weight seats
•Internet Reservations
•Cost and Service Culture
•Human Resource training on efficient processes
•Centralized operation controls Centre
•Highest no. of CAT III compliant pilots

18. CONTD…
Operational Efficiency
•Low turnaround time
•Aircraft Utilization
•On-time performance for time sensitive travelers
•Young fleet of aircraft (hence less maintenance issues)
•Lower employees per aircraft
•Fuel efficient engine
•Zero inventory of components
•Same configuration of all aircrafts providing flexibility in allocation
Positioning
•Limited Passenger Service
•Low price tickets
•Point to point routes
•Frequent and reliable departures

19. Giving a feel of the Product inside a Service Wrapper: Consumers are
demanding not products or features of products but the benefits they will be
offered
The airline product consist of two types of Services: On the ground Service, In
flight Services.
PRODUCT MIX

20. MARKET LEADER STRATEGY

21. IndiGo’s media campaign has focused more on customer service and
less on pricing where it is hard to be competitive, and the airline’s avant-
garde branding has been a major differentiator.
IndiGo’s same-day return flights from major Indian cities, extra seat pitch (2
inches more than India’s industry standard) and new aircraft.
IndiGo’s check-in counters feature banners saying “India’s Coolest Airline” and
check-in queues have “Cut The Red Tape” signs.
BRANDING

22. Communication Objective: IndiGo promotes the following three things majorly as
part of its advertising program- On time performance, Affordable fares and Hassle
free Passenger experience
PROMOTIONAL STRATEGY

23. Advertising Strategies:
Hoarding at airports with focus on Best on Time performance
Advertisement through social networking medium like Facebook, Twitter, etc.
Collaboration with multiplexes in major cities to promote the airline and its offers
Hoardings in multistoried buildings and offices
Ads in magazines targeting urban population
Sponsoring fashion shows, talent hunts, new year parties, etc.
Collaboration with consumer banks, credit card companies, hotels, ticketing
websites to promote special offers, discount, cashback etc.
Promoting in regional languages in respective sectors thus giving a local flavor
Sending special offers to frequent fliers through sms, email, etc.
CONTD…

25. •IndiGo will have over 45% of the capacity of
all low-cost carriers in 2016-17
•It will get delivery of fuel-efficient A-320 Neos
from end 2015
•12-13 new cities will be added in two years,
taking the total destinations to 40 by 2016-17
•It plans to increase frequency on the India-Dubai
and India-Muscat routes
THE ROAD AHEAD

26. Building on strength
Meet the Global challenge and increase its footprint
Cost Control
Increase depth by venturing into cargo and chartered airlines
Continue being close to the customer by being consistent in their services and
comfort to customers
Come up with innovative offerings
Provide exciting and affordable travel packages
Increase tie-ups with hotels and banks
Differentiate themselves even more by improving media and communication
channels thus improving the overall communication plan
Continue to improve organizational development, which is a critical to airlines
RECOMMENDATIONS

27. THANK YOU 