jetstar pacific airlines

National Economics University

BTEC HND in Business

Jetstar Pacific AirlinesMarketing Planning – New flight route Hanoi Kunmin

Spring/Winter/Summer 2012, Vietnam

Group Marketing Consultants:Pham Thu Ngan –

Le Thanh Hang – 4329 Nguyen Thi Thuy Duong –

Le Thanh Tung – Vu Ngoc Minh –

Pham Trung Hieu - 4055

Instructors: Nguyen Thi Thu TrangTrinh Thi Thu Giang

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TABLE OF CONTENTS


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INTRODUCTION


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BUSINESS STRATEGY

I. The needs to be innovative in the business and airline market

1. For economic growth

Innovation is the creation and transformation of new knowledge into new products, processes, or services

that meet market needs. As such, innovation creates new businesses and is the fundamental source of growth

in business and industry.

2. For competitive advantage

Companies that use and act on their insights get a jump on the competition. They are the competition. They

leave behind those that are lulled by the security of strong, enduring economic performance and the

conventional corporate wisdom that stays the course. Often, the leader loses.

3. Because cost-cutting is not enough anymore

Profit equals to revenue cost. The profit equation shows that for profits to grow, or even be maintained,

you've got to manage cost, even reduce it. It is the most obvious way to grow profits. And companies have

been doing this: with technology; by downsizing; through re-engineering.

4. Desire for higher business revenues

With costs reaching bottom and few opportunities to reduce them further, companies can turn to increasing

sales. Marketing innovations come to mind here and do well to sell more of what you have to sell. But new

products and services bring in new revenues too.

5. For business survival

For companies to survive a discontinuity, they must face the rather unpalatable reality that there may have to

be fundamental changes in who they are, what they do, and how they do it, as wrenching and dislocating as it

may be.

6. Needs to be innovative in airline industry


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It is suggested air traffic growth seems to be resuming after the economic decline of 2008-09. Future growth

trends will be driven by the low-cost airlines, as they continue to increase their passenger loads. Low cost

airline have revitalized many regional airports, leading to competition between airports and the need for

airports to be competitive in their fees. This presents a challenge to airports to find new sources of revenue,

with the clear understanding that they cannot continue to operate with a more of the same attitude. Airports

recognize that they must adopt new approaches in order to actively support this growth of air travel and be

competitive. Those airports that successfully rise to the challenge will become airports of the future and will

exhibit three key characteristics that distinguish the successful from all others:

- Lower-cost operating costs

- Faster and more efficient passenger flows

- New revenue streams, driven by increased retail and services opportunities

II. Techniques for developing products

III. Situational analysis

1. Airline market overview

a. Market definition

A market definition for Jetstar should contain two dimensions: a particular product (new airline from

Hanoi to Kunminh) and geographic area (Hanoi). It is often practical to define the relevant product market

first and only then to define the relevant geographic market.

Following the price rise, customers may switch some of their purchases from the focal airline to other

substitute airlines (demand side substitution). It is not necessary for all customers, or even the majority, to

switch. The important factor is whether the volume of purchases the new product likely to be switched is

large enough to prevent a hypothetical monopolist profitably sustaining prices 5 to 10 per cent below

competitive levels. A significant factor in determining whether substitution takes place is whether

customers would incur costs in substituting products. High switching costs relative to the value of the

product will make substitution less likely.

For consumer products, geographic markets may often be quite narrow, e.g. where sufficient numbers of

consumers are unlikely to switch to products sold in neighbouring towns or regions, let alone countries.


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b. Market size

Pacific accounted for 40% market share for passenger transportation on their main routes between Ho

Chi Minh City and Hanoi and captured 5% of total domestic air market. Airline Jetstar Pacific is Vietnam's

only unused tickets, provides 100% electronic ticketing and payment by credit card online through their

website and reservation services over the phone.

c. Market structure

Oligopoly: in Vietnam economics, the “sky” market consist of only two main companies (VNA & PA)

who are highly sensitive to each other’s pricing and marketing strategies. There are few competitors

because it is difficult for new firms to enter the this market. Each seller is alert to competitor’s strategies

and move.

d. Market segmentation

Previously, the airline market in domestic only exploited by 3 airline companies in the country is

Vietnam Airlines (VNA), PA and Vasco. However VNA remains giants, almost snatching market with

around 86% market share, competitiveness appear only on the routes Hanoi - Ho Chi Minh City and Da

Nang - Ho Chi Minh City. But when the PA restructuring of capital and Qantas Airlines (Australia) to buy

30% to $ 50 million, the opportunity to develop the PA is also synonymous with competitive on the

domestic market will be fiercer and VNA directly affected.

e. Market potential

Traditional and cheap: For a country more than 80 million people, the number three airline domestic

(including Vasco is a firm of VNA) with 1% of users means of airline is too low, because of that inevitable

market will have more new faces. Vietnam law has allowed the private to open airline and foreigners who

can contribute to 49% on airline Vietnam, so the presence of foreign firms is just sooner or later. VNA and

PA with two business model aimed at each market segment, competitive enough to confront and annihilate

each other is unlikely. However, competition will appear on some competing routes and boundary between

traditional and cheap are no longer exist. Thus, consumers are absolutely have right to expect to use these

products not only high quality but the price í comfortable. The first signal is 30,000 VND tickets were sold,

super cheap promotion of PA. Accordingly, flight Hanoi - Ho Chi Minh City will be only 500,000 VND Instructors: Nguyen Thi Thu Trang

Trinh Thi Thu Giang

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per visitor.

f. Market trend

Believe in the article comments: people tend to put a holiday if they are reading the article its good

points of the other tourists. Research shows that consumers' opinions posted online are more believe than

on the press. The holiday will still be affected by the economic downturn but the customer will request a

personal style when booking. People have decided to travel but will choose how to spend money and where

a lot more carefully.

2. Jetstar Pacific analysis

3. Customers analysis

4. Competitors analysis

5. Airline industry analysis


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STRATEGIC MARKETING FOCUS

I. Selected strategy

II. Mission

III.Goals and objectives

IV. External environment – PEST

There are various environmental factors which influence the business of Jetstar such as Political and

Legal factors, Economics, Socio-cultures, and Technologies.

1. Political and legal factors

The political system in Vietnam is quite stable because of its single, undisputed ruling political party,

the Communist Party of Vietnam. In spite of conservatively communist, Vietnam has undertaken some

reforms in recent years. In addition, Vietnamese legal system is set up rationally to attract the investment

of foreign organizations. For example, as from 1 January 2009, the standard corporate income tax is

reduced from 28% to 25% and will be reduces to just 20% from 2011. Moreover, Jetstar Pacific Airlines

is the first low-cost Vietnam, been transformed from Pacific Airlines in May 2008. Jetstar Pacific

Airlines now has 27% shares of the Qantas Group, the rest belongs to other major Vietnamese

shareholders such as Vietnam Venture Corporation and the State Capital Investment Corporation

(SCIC), Saigon Tourist Corporation and Mr. Luong Hoai Nam - General Director of the Pacific. This


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thing may affect to the process of opening new air-line of Jetstar. Besides, Vietnam and China are very

near, especially Hanoi and Kunmin. Therefore, the price of the ticket from Hanoi to Kunmin cannot be

too high. It will affect the buying behavior of customers and the price which is set by Jetstar a lot. Those

factors of the political and legal terms make the stabilities for Jetstar to open new air-line from Hanoi to

Kunmin in China and somehow encourage the current business and the developments of the company in

the future.

2. Economic factors

The Vietnamese economy has been developing rapidly and “Vietnam is one of the best performing

economies in the world over the last decade”1. According to the World Bank report in 2008, real GDP

has on average grown by 7.3 percent per year during 1995-2005. Furthermore, the economic growth in

2007 performs impressively with 8.5 percent, making 2007 the third consecutive year above the 8-

percent benchmark. Although, almost countries all over the world suffered from the financial crisis in

2008, the economic growth of Vietnam still maintain at high level with 6.2%. Besides, income per capita

rose from US$ 260 in 1995 to a 2008 level of US$ 1047 when Vietnam has already been a member of

World Trade Organization. Besides, according to a report established by HSBC in 2007, the GDP of

Vietnam was 8.5% and it may decrease gradually to 6.6% in 2010. Accordingly, this is also advantages

for Jetstar when opening new air-line from Hanoi to Kunmin in China because it will attract many

Vietnamese customers in the middle-income group and have the demand of travelling abroad because

the price of Jetstar is for all levels of customers.

1 Vietnam – Country Overview. Available from:

http://siteresources.worldbank.org/INTVIETNAM/Resources/VietnamCountryOverview


http://siteresources.worldbank.org/INTVIETNAM/Resources/VietnamCountryOverview

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2005 2006 2007 2008f 2009f 2010f0

1

2

3

4

5

6

7

8

98.4 8.2

8.5

6.4

5.4

6.6

GDP (%/year)

GDP (%/year)

GDP of Vietnam from 2005 to 2010 (Source: HSBC)

All data above show that Vietnam is in a developing economy and being a potential market where

consumers are always ready to travel abroad and book flight ticket with inexpensive price and good

quality of flight. These things will provide them values which can bring prosperities to Jetstar’s business

in a long period.

3. Socio - cultural factors

Vietnam is a densely populated country with over 86 million people - the 15th country in

population level, which is a potential market for Jetstar to invest new air-line in Vietnam, especially

the capital - Hanoi. Besides, Vietnam population has been increasing gradually with the population

growth rate was estimated by 0.977 in 2009 (CIA, 2009). Additionally, the population distribution is

continually moving from countryside to cities. In 2005 and 2006, the volume of urban citizens was

22.13 million (occupying 26.8% the total Vietnam population), and 22.82 millions (occupying 27.1%

the total Vietnam population) respectively. In 2008, the urban population occupied 28% of total

population. It means that it is more and more people leaving the countryside to cities to live and cities

are going to be more crowded.


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In fact, as the research result recorded, the travel tour or business tour from Hanoi to Kunmin in

China is very attractive to customers in the North of Vietnam. They often travel by train or bus in

order to save money although the duration of the journey is not short and the way of transporting is so

complicated. For example, customers can go to Lao Cai Province by train or bus, then they will

continue the journey to Kunmin by train and bus or take a flight of Chinese Airline. Besides, the

Hanoi – Kunmin air-line of Vietnam Airline is also a choice for them to save time. However, the

price is not cheap. Accordingly, this is an advantage for Jetstar if the company competes with other

competitors and commits to supply customers a cheap flight with good quality.

Furthermore, the lifestyle of Vietnamese is changing towards to foreign style, especially the young

generation. They are now preferring to travel abroad, especially cheap flight. This also affects the

buying behavior of the consumers. That is the reason why Jetstar should use the cheap-price

advantage of the company to attract them.

Therefore, it seems to be said that Vietnam is a potential market for Jetstar to expand the business.

4. Technological factors

Technological factors can affect Jetstar’ orientation in both positive and negative sides.

Indeed, with the fast development of modern technologies, the company can easily promote its

flights. Otherwise, citizens can access to the flights’ information and book ticket by touching it via

internet or mobile-phone instead of going to the ticket agenciess, which is called e-ticketing, e-

services and e-customer care to save consumers’ time. By the way, Jetstar and customers can easily

approach each other, and the company can know how customers satisfy their flights and services,

then the company can maintain and promote them.

Moreover, upping-to-date the technological development of air industry in a country is an

important factor for the company to innovate its services to adapt with the customers’ needs and

wants as well as estimate new trends of the market. Nevertheless, this may cost lots of money. For

examples, Jetstar now is planning to change all its planes into Air Bus A320 instead of Boeing 737 as

a result of values.

In fact, Vietnam has been developing rapidly since renovation. Accordingly, there are many

changes such as technology, quality of products and services. Besides, promoting and innovating


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technologies to catch up with the developments of Vietnamese and Vietnamese new demands will

require the company much spending.

V. Internal environment – SWOT

MARKETING PLAN


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I. Target market

II. Intended strategy – Market development (extending new route)

III. Marketing programmes

1. Product

We plan to launch new Jetstar air-line from Hanoi to Kunmin in China in 2012. This airline is sold

mainly for two types of customers in the North of Vietnam:

Customers who book ticket online in http://www.jetstar.com/vn/en/index.aspx or in Jetstar ticket

agency.

Customers who book a group of ticket such as tour agents and so on.

In order to set the suitable time for the flight, we made references to Vietnam Airline and the difference

between time zone of Hanoi and Kunmin. In fact, the time zone in Hanoi does not differ much from the

time zone in Kunmin with just only one hour. Besides, after analyzing the customers’ behavior in the North

of Vietnam, we recognize that most of customers go to Kunmin for travel and a small number of them go

for business and they often travel by train or bus in order to save money although the duration of the

journey is not short and the way of transporting is so complicated. Accordingly, it will be beneficial for

customers if Jetstar can save them more time.

Compared to the most favorite time of customers travelling a long-distance journey by train is between

00:00am and 9:00am (Figure 1); we decided to set the time for flight is from 7:00am to 8:20am. It means

that customers will arrive to Kunmin in 9:20am followed the time zone there.


http://www.jetstar.com/vn/en/index.aspx

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Rail journey time (Source: http://www.icea.co.uk/)

Indeed, it just takes customers around one hour to fly to Kunmin from Hanoi. Customers will come to

the airport at about 5:00am and make a check-in routine there from 5:00am to 7:00am. We suggest Jetstar

to set about three flights per week in Monday, Wednesday and Friday. With this time of flights, we ensure

that customers can minimize wasted time for transporting while they absolutely can fly with Jetstar to

Kunmin in 9:20am then spend about one more hour to go to the hotel and take a rest. In the rest of the day

and days after, it is time for travelling or doing business.

Although air-line from Hanoi to is not a new product in Vietnam, it is still not popular because only

Vietnam Airline exploits it. Jetstar should commit to supple customers cheapest price as the company’s

strategy and improve the quality of flights, to compete with its major competitors mainly based on price

differentiation.

In term of plane, Jetstar can use Airbus A320 for this air-line because of the lower-fares than Boeing 737

and the economics (Airbus A320 can transport 180 customers while Boeing 737’s transportation is lower

with 167 people).

2. Price

3. Place


0%

20%

40%

60%

80%

100%

00:00 02:00 04:00 06:00 08:00 10:00

Rail journey time (hours)

Rai

l ma

rket

sh

are

http://www.icea.co.uk/

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4. Promotion

5. People

For any service, the provision of people is a very important ingredient. Especially for Jetstar, who

provides aviation service, recruiting the right staff and training them appropriately in the delivery of their

service is essential if Jetstar wants to satisfy the customers. People do not mean solely the fight attendants;

there are pilots, officers, guards and a lot of positions to be concerned. Consumers make judgments and

deliver perceptions of the service based on the employees they interact with. That is the reason why

Jetstar’s staff should have the adequate interpersonal skills, attitude, and service knowledge to provide the

service that consumers are paying for. Firstly, it is very important for Jetstar to have good pilots. Even

though pilots do not interact much with people, they are responsible for passenger’s lives, moreover, the

way they control the airplane affects customers directly on how they feel about the safety level of the flight.

That is one of the factors which customers consider the most when choosing airlines. Secondly, the ones

need to be trained very well are flight attendants. They are who interact directly with customers and leave a

lot of impression in customers’ mind. The way they dress, communicate, serve customers as well as deal

with problems on board must be perfect in order to satisfy the customers. For Jetstar, besides recruiting the

flight attendants from flight academy, they have to provide them with an extra training course to improve

their knowledge about the company, their job, emergency handling as well as their interpersonal skills. Last

but not least, it is the ground staff, they do not flying with passengers, but also play a very important roles

in creating the image of the airline. Overall, for an airline like Jetstar, they need to have a standardized

system and regulation about how the staff behave in order to retain a good image of the whole company.

6. Processes

7. Physical evidence

Physical evidence refers to the Jetstar Company’s environment in which the service is assembled and in

which the airline company and customer interact, combined with tangible commodities that facilitate

performance or communication of the service. The physical evidence of service includes all the tangible

representations of service such as brochures, letterhead, reports, e-tickets, internet presence (Jetstar

Pacific’s website) and equipment in the airplanes. For example, in the Jetstar Pacific, the interior

decorations, furnishing, lighting, viewing-door, and safety life-jackets as well as the appearance and

attitudes of its employees will influence customer perceptions of the service quality and experiences.

Because of the simultaneous production and consumption of most services, the physical facility i.e. its Instructors: Nguyen Thi Thu Trang

Trinh Thi Thu Giang

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servicescape can play an important role in the service experience.

IV. Time table of activities and budget

TaskImplement

erPeriod

Propose plan to Kunming Airport and Chinese Airline Management OfficeJan 2011

Complete legal procedure:- Get the license for a new air – route- Obtain a business registration certificate as well as a tax registration certificate

from the local business registration office under the Department of Planning and Investment.

- Register with the local labor office to declare use of labor (Municipal Department for Labor, Invalids and Social Affairs).

Feb 2011 -

Jun 2011

Recruit necessary staff and checking for facilities Apr – Jun

2011

Publish announcement July - 2011

Advertise to tour agency and booking office for pre-booking. Jun 2011 -

Aug 2011

Press meeting and start issue tickets18 Aug

2011

Launching promotion campaign

- Advertisement on TV, newspaper, Internet

- Pre-booking discount

Aug 2011 -

Dec 2011

Promotion campaign for Tet Holiday 2012Jan 2012

Promotion program for 30/4 - 1/5 holiday (4days)Feb 2012


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Promotion program for Summer 2012May 2012

V. Control and evaluation

CONCLUSION


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APPENDICES (Tables and charts)


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REFERENCES


jetstar pacific airlines

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